The Dave Business Model – How Does Dave App Make Money?

Executive Summary:

Dave is a personal finance app available on Android and iOS devices. Users can budget their finances, borrow money from Dave, and even find side hustles on the platform.

The Dave app makes money via membership fees, donations from users, interchange fees, interest earned on cash, and referral fees.

Founded in 2016, Dave has grown to become one of the leading FinTech startups in North America. Its platform now counts over 8 million users.

What Is Dave App?

Dave is a personal finance application that offers various banking products. Example features include:

  • Small advances on your paycheck to cover bills.
  • The ability to build up your credit score.
  • Being able to retrieve money with Dave’s debit card without paying ATM or overdraft fees.
  • Automatic budgeting, allowing users to set money aside every month.
  • An online marketplace to find a side hustle, for instance dog walking or other gig jobs.

A monthly membership fee of $1 is applied to use the product. However, if you connect your debit card to the app, you may be able to eliminate the $1 fee by shopping at preferred retail partners.

Accounts can be set up in minutes and only require an email address, mobile phone number, and linked bank account.

Dave provides users with a dedicated customer support team should anything unforeseen happen. Accounts are, furthermore, FDIC-insured up to $250,000.

Right now, Dave is only available to users in the United States. Users can access the service by downloading its mobile phone app (available on Android and iOS devices). Dave has currently over 8 million people using its app.

A Short History Of The Dave App

Dave, headquartered in Los Angeles, California, was founded in 2016 by Jason Wilk (CEO), John Wolanin (CDO), and Paras Chitakar (CTO).

Prior to starting Dave, Wilk had already gotten his hands dirty as a founder of 3 other businesses. He launched after wrapping up his degree at Loyola University (which he attended on a golf scholarship).

1DaySports was a flash sale site for golf products where users have a 24-hour period to purchase a product until the item sells out or next day arrives. He launched the website while studying abroad in China and sold it two years later, in 2008, for $100,000 to a private investor.

While building 1DaySports, Wilk picked up another past time: blogging. On his blog, he was covering the most interesting developments he observed in the (tech) startup world.

Being a proper startup geek, he decided to attend a TechCrunch event in 2008. One of the keynote speakers on the agenda happened to be Mark Cuban who at the time wasn’t actually an active investor.

The moderator then asked Cuban what it would take for him to invest into someone’s startup. Cuban stated a few key factors, such as communicating to him via email among some other points.

This prompted Wilk to publish an article titled “10 ways to get Mark Cuban to invest in your company”, which ultimately went viral and got him a lot of coverage.

He wound up meeting Cuban at the TechCrunch afterparty and he told Wilk that he actually read the article and was really appreciate of it.

At the time, Wilk was already working on his next venture and, therefore, wanted to find a way to work together with Cuban. He then emailed him over the course of the next few months, with the pair consistently bouncing off ideas and Cuban giving his suggestions.

One of those ideas eventually turned into a company called AllScreen, which he launched together with Chitrakar as his CTO and co-founder. Soon after, the pair was accepted into Y Combinator. Mark Cuban then led the startup’s first ever outside funding round.

AllScreen was a syndication platform for video content, allowing media companies (such as Vice) and brands to distribute their premium video content and advertising at scale to viewers across all screens.

They eventually grew the business to $20 million in annual revenue (while only raising a total of $330,000) and subsequently sold it to Zealot Networks for $85 million in 2016).

After the successful exit, both Wilk and Chitrakar did not waste any time and almost immediately started working on the venture that eventually became Dave. They added Wolanin, who started a few companies himself and served as the Head of Design at coupon app Honey, to the founding team.

The idea for Dave was born out of the team’s frustration with overdraft fees. All of them had their fair share of struggles with trying to repay them when they were in college (and beyond). Even Mark Cuban admitted he got crushed by overdraft fees when he was in his 20’s.

In 2016, according to the Wall Street Journal, overdraft fees hit a 7-year high, forcing consumers to spend more than $33 billion on overdraft charges. Meanwhile, startups like Earnin were gaining significant traction by helping people to avoid overdraft fees.

After partaking in JP Morgan’ FinLab accelerator, which allows them to meet with financial regulators and potential partners, Dave was launched in early 2017.

dave company history
Wayback Machine

To give themselves a head start, the team raised a $3 million seed round from Mark Cuban, SV Angel, The Chernin Group, and even music artist Diplo.

In the beginning, Dave was completely focused on eliminating the overdraft problem. As such, its app allowed users to connect their existing checking accounts and receive notifications whenever they’re about to be short on cash (and thus risk overdraft fees).

Users could then borrow money directly from Dave to ensure having enough money on balance. Loans would then be automatically repaid once the user received his or her paycheck. The app was able to then connect to over 3,000 banking institutions.

Over the course of the next few months and years, Dave’s team stayed relentlessly focused on building out the borrowing product. The team continued to raise money, such as a $13 million Series A round in October 2017, to fuel growth.

By the summer of 2019, Dave had amassed a user base of 3.5 million, making it one of the most frequented finance apps in the United States.

On the backbone of that growth all while observing the ascend of other challenger banks like Chime, Dave announced that it would launch its very own banking product. It introduced Dave Banking, digital-only deposit account (a physical debit card was added in July 2020) in cooperation with Evolve Bank & Trust.

Over 500,000 users signed up for the waiting list, making it an absolute homerun. On top of that, Dave raised another $110 million in debt financing to be able to invest into its banking products.

By September 2019, Dave hit unicorn status when investors valued the business at $1 billion (while simultaneously investing $50 million) during its Series B funding round.

The company continues to operate in blitzscaling mode. For instance, it was able to hire former lead Apple Card executive Jarad Fisher as the company’s first chief commercial officer.

More than 8 million people are now registered on Dave. Furthermore, over 200 people are now employed by the company.

How Does Dave Make Money?

Dave makes money via membership fees, donations, interchange fees, interest earned on cash, and referral fees.

Let’s dive into each of these revenue streams in more detail below.

Membership Fees

Dave generates revenue by charging users a monthly membership fee of $1. This subscription-like fee allows Dave to cover its operations and invest into new products.

Furthermore, the membership charge is used offset the costs of offering predictive texts (when a user is about to overdraft) and connecting to the user’s bank (Dave gets charged every time their connect to another bank).

While a $1 fee may sound low, it may seem a lot if you compare it to competing services like Earning, which remain free to be accessible free of charge.

Charging membership or subscription fees is fairly common among FinTech startups. Companies like Acorns or Digit do derive a substantial portion of their income from charging members for access to their service.


Another considerable amount of revenue that Dave generates comes form the donations it collects. Users can voluntarily tip the company whenever they borrow money.

Dave utilizes concepts of behavioral psychology to entice users to tip. For every tip that you leave, Dave plants a tree in partnership with Trees for the Future.

This plays into Dave’s approach to humanize its banking service. As such, Dave is “trying to take [the brand] away from a faceless institution,” Laurel Sutton told Vox in a 2019 interview.  

Furthermore, it sometimes brands its bank as a David (or Dave) vs. Goliath situation, further emphasizing that the ‘bad’ banks are out to get your money.

This friendly notion eventually creates a sense of belonging, which in turn makes it easier for users to tip the company.

Nevertheless, these tipping practices have been under great scrutiny in the past few years. Critics argue that the tipping model resembles that of a modern-day payday loan company. For instance, a $5 tip on a 4-day repayable loan of $100 would be equal to an APR of 456 percent.

Some states have already intervened. In New York, for instance, lenders aren’t allowed to charge more than 25 percent in interest for loans up to $2.5 million. Even Google has responded by banning all apps that provide personal loans with APY rates higher than 36 percent.

Dave minimizes its risk by allowing users to only borrow money once at a time. Borrowers need to repay the loan before being able to access another one.

With the introduction of its banking products, Dave will try and move further away from its tipping system to avoid any future legal troubles.

Interchange Fees

Dave offers a Mastercard debit card in cooperation with Evolve Bank & Trust. Whenever you pay with the debit card, a so-called interchange fee is applied.

This fee represents a percentage of the purchasing price which is paid by the merchant who receives that payment. It’s normally below the one percent range.

Dave receives a portion of those fees every time the debit card is used. The actual percentage share is not publicly disclosed.

In an interview with TechCrunch, Wilk said that Dave made a good deal with Evolve Bank. He emphasized that they “liked the team and liked the terms and went with them.”

Interest On Cash

Dave, just like any normal bank, uses the unused cash residing on its user accounts to generate interest income.

It deposits said cash into interest-bearing bank accounts on which it then generates income.

The company incentivizes users to keep their cash in its cash accounts by paying interest. Consequently, those interest fees are lower than what the firm generates from the cash it deposits.

Referral Fees

In 2019, Dave launched its Side Hustle feature. Side Hustle is an online marketplace that allows users to participate in the sharing economy by working gig jobs.

Users can even opt into doing remote jobs. Example partners include Airbnb, DoordDash, Inbox Dollars, Instacart, TranscribeMe, and many more.

With Side Hustle, Dave makes money via referral fees. Its partners pay Dave a commission whenever they refer a new gig worker to their service, which in turn makes their platform more robust (by building up the supply side of the marketplace).

Dave App Funding, Revenue & Valuation

According to Crunchbase, Dave has raised a total of $173 million across six rounds of equity and debt funding.

Notable investors include Financial Solutions Lab, Mark 2 Capital, Norwest Venture Partners, Victory Park Capital, Mark Cuban, David Friedberg, and many more.

During the firm’s latest equity round (Series B announced in September 2019), Dave was valued at $1 billion. This officially puts them in the unicorn club.

As a private company, Dave is not obligated to publicize its revenue or profit figures. This will be the case should the company ever decide to go public.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.