00:04:10 · Jason Wilk, Guillaume Moubeche
We didn't launch banking really until 2021, where people could make Dave their primary accountant, and should they choose. [00:04:18] S1: And can you maybe like walk us through the equity story? Like, did you have to raise fund in the early days? Like, who were your investors? Like, was it easy? [00:04:26] S0: The seat round was fairly easy, because I utilized most of my investors from my previous company. And one of our investors, I had a a deal with that whatever they made in the previous company, they would automatically write me a check for the next company, sight unseen for 50% of whatever their profit was. So that check was Nice. Was real easy. It turned out really great for that guy, because he never would have written that large of a seed check usually. And it's... I think that stake's worth over a $150,000,000 now. So he's done done quite well. And then two of my other lead investors from my last business also participated. We rounded out the the group with Ron Conway and as SV Angel among some other people in the seed round, but that was a $3,000,000 round, which we used basically to buy the domain name, give us some capital to hire the early team. And also, we needed some principal capital to actually lend out to users because we didn't... At that point, had no credibility with private credit, and certainly no bank was gonna be willing to lend us money with no experience. [00:05:32] S1: And the second round, like, how exactly did it go? Like, did did you feel like you had to to work a lot harder or like
00:05:42 · Jason Wilk
[00:05:42] S0: The second round was really difficult because we clearly had product market fit. Customers were loving the product. We were scaling. Our CAC was really low, but our loss rates were really high. They were like 20%. And so it wasn't quite clear that the... This customer profile that we were underwriting was gonna be able to be able to lend to profitably. And so we had that going against us. And also, every venture capitalist, at least that I spoke to, had never really even heard of overdraft fees. They didn't recognize it as a major problem. And the third was that neobanks historically had not gained a ton of traction. The most successful exit thus far was, I think, Bank Simple, which sold, I think, for a $150,000,000. So, you know, not great comps, not great loss rates, problem that investors don't really understand. And it took me about a 120 meetings to get the series a done. And ultimately, it was with an investor that wasn't even in writing checks into fintech. It was just a connection with one of our board members who said, trust me. It's a smart team. Jason's hard working. You know, he'll figure it out as he always does. And so that really was the catalyst of getting the check there. We had a tremendous performance from that $10,000,000,000 check. We got loss rates down to a few percent. We were scaling users. We got to an enclosed to a million users in first couple of years. And we didn't raise our next round of funding until we reached a billion dollar valuation in 2019. And that was a big deal, because there weren't that many unicorn businesses back then. We weren't in a hurry for raising more capital, and so we'd be more patient. But the traction we had at that point was sort of irrefutable at that at that point in time. And so raising around was a little bit more competitive, and we brought on a great investor of Norwest Venture Partners who led that round in... Entirely. And that $50,000,000 equity check lasted us all the way to the IPO. So it's incredibly capital efficient. I think we're around 63,000,000 of total primary capital raise, the, yeah, the next round was our our public transaction.
00:07:51 · Guillaume Moubeche
[00:07:51] S1: How exactly do you, like, prepare for an IPO? And when do you decide, like, if you're ready or not?
00:07:57 · Jason Wilk
[00:07:57] S0: Well, we were really quick towards an IPO, and more so more so than most. I think as of January next year, we'll have been a public company longer than of being a private company, which is really interesting. And so it's almost like we've forgotten life as a private business and don't miss it that much. And to be honest, we we like the rigor of the quarterly reporting. We sort of got ourselves in this quarterly reporting mindset, leading up to the the IPO. And fortunately, what gave us a lot of confidence is our business is very forecastable. We can... We have a lot of cohorts that have been with us for a long amount of time. We have a very heavy repeat users, and we want, like we felt the business was ready, even though we were early on to become a public company. As of January, we'll have been a public company, than being a private company, and don't really miss it that much, because our business is very... A lot of repeat customers. And so, we feel like we can forecast the business really, really well. I think that's a key for a public company, and investors wanna be able to build models they can rely on. And given we have 98% of our customers every month are our repeat users, we just felt very confidence, a lot of confidence in the core model. So aside from that, just building up the management team, getting the public board ready, and then going on the roadshow process to find our lead investors, is not too dissimilar from a a private capital raise, other than you have to convince 50 people to validate your valuation as opposed to one. And I think that's a major difference in public versus private. It's just your valuation in public is more consensus versus private is literally can be just the opinion of one person.
00:09:40 · Guillaume Moubeche
[00:09:40] S1: And how long did it take you from, okay, I think we should IPO to let's ring the bell? Like, what was the the timeline?
00:09:48 · Jason Wilk
[00:09:48] S0: Well, the market was ripe for IPOs. You know, we actually... We were marching our way there. We thought we had a a great opportunity to go public. Decided to wait a little longer to see how the the market was gonna continue to play out. And ultimately, decided to go public in January 2022. The market looked a little soft when we went out, but we had a great IPO. I think we were the best performing stock of the first couple months when we went out. Valuation got to over 5,000,000,000. And then, the market fell apart. The interest rates went up, which led to fintech being a bad name. Anything being a lending, being a bad name. And then with growth capital effectively coming to a halt, if you were a company that was losing money with the expectation you had to possibly raise some more, people just underwrote your valuation effectively to zero. And we went from being a $5,000,000,000 company to a $50,000,000 market cap company, within a matter of nine months. And we were trading for less than our cash value for a good amount of time. It was a really challenging place to be. But ultimately, we loved our business. We knew that all we had to do was grow our way out of this, which was not a really great narrative at the time. But our plan was to keep burning capital until we could actually cross the user threshold required for us to reach profitability. And to us, as an already lean business, that was really our only pathway to success, because we couldn't cut our way there. Like most businesses could do that. We were a very lean team. We're still a very lean team with only 300 people at the company today. Actually, a little bit less than that. And just... We kept our heads down and and and got there. And here we are today, nearly 4,000,000,000 our market cap. And, you know, team's team's happy. Investors seem to be pretty happy, and we think there's an auto room to run from here.