Imagine, for a second, what would happen if a highly contagious disease gripped the United States. Let’s even say it rose to the level of a pandemic. Local governments would order citizens to stay at home and shutter businesses. Unemployment would reach record, catastrophic highs, cutting Americans off from their health insurance and basic necessities. 

To top it all off, the shift to work from home means companies will slow down hiring, so even the freshly unemployed wouldn’t have options to seek out. All this means money would be tight for so many Americans, who would start counting pennies like hawks. The prospect of using a big bank for a checking account, with its overdraft and usage fees, would become unappealing to many. It is, as they say, expensive to be poor.

Enter Dave ($PRIVATE:DAVE), our Startup of the Week. At a basic level, what Dave aims to do is help customers avoid banking overdraft fees. Pitching itself as “banking for humans,” Dave pits itself and its teddy bear mascot as going against Goliath (the banks and their fees) by providing customers with paycheck advances in the form of up to $100 mini-loans if they’re at risk of incurring an overdraft fee. 

It’s a tool most useful to those living paycheck to paycheck, concerned that they won’t just not be able to pay a bill that’s coming in, but will then have to pay a $38 overdraft fee on top of it. Dave does not just give out free money; its service costs $1/mo and its advances need to be paid back, but that $12 yearly cost is a better alternative to the hundreds in fees someone could potentially face without it.

Dave’s Apple App Store ratings (not shown) have steadily increased by about 10% throughout the summer as it checks more and more users off its waiting list and sets them up with accounts, but Facebook Talking About Counts really show the amount of people out there in need of a service like Dave’s. There’s been a 210% increase in chatter about Dave on the platform since June, and as the pandemic and its financial insecurities rage on, more and more people are flocking to an app that could give them some reprieve. Dave has stated that it expects to have 1 million active users by the end of 2020.

Dave has expanded its services to banking, debit cards and budgeting in attempts to establish revenue streams outside its light subscription fee, and is one of many startups trying to drive customers away from legacy banks and towards their online options. Making money as a financial tech startup is incredibly difficult, and Dave is clearly trying to get as close to profitability as it can without blurring the line between itself and the Goliaths of the financial world.

Dave has caught the eye of notable investors like Mark Cuban, been featured on CNBC’s 50 Disruptors list, and has secured a billion dollar valuation. While it is far from up-and-coming, it is noteworthy as one of the most successful personal finance apps thanks in large part to how well its services adapted to the needs of so many after COVID-19 devastated the job market. That demand has driven a lot of growth for Dave, not just in its customer base, but in its size. Employee headcount has more than doubled year-over-year, and its job listings have remained mostly steady throughout the summer, dipping from 17 to 13 from June.

But still, it’s not all sunshine and roses - and teddy bears - for Dave, as much as they would like it to be. Less than a month ago, Dave fell victim to a major hack that exposed 7.5 million users. While Dave tries to promise financial security for its users, it needs to promise security overall if it is to become the “next great financial institution” its site says it wants to be. The short-term relief of a paycheck advance to avoid an overdraft fee may be nice, but the implications of having all your personal and financial information posted on the internet could do more damage than a negative balance ever could.

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