Dive Brief:
- Chime offered to buy earned wage access startup DailyPay twice this year, first for $1.6 billion and then for $2 billion, and was rejected twice, The Information reported Thursday, citing sources familiar with the matter.
- The neobank’s first offer, which it put forth in May, comprised $300 million in cash, $1.2 billion in stock and $100 million in restricted stock units, the outlet reported. A second offer, which Chime presented in June, entailed $700 million in cash, $1.2 billion in stock and $100 million in restricted stock units.
- DailyPay declined both offers after its board decided the bids undervalued the company, The Information reported. Chime and DailyPay each declined Banking Dive’s requests for comment regarding the report.
Dive Insight:
The deal would have provided Chime, which makes most of its revenue from interchange fees, with a new vertical and access to a new customer base, The Information reported.
But DailyPay, which was founded in 2015 by Jason Lee, may be content to wait for a better offer, or perhaps lean on its track record of successful fundraising going forward.
The company has garnered $500 million in financial support, including $175 million in equity capital and $325 million in credit, from multiple sources, according to a May 2021 press release.
But fintechs like DailyPay (Chime included) have not been immune to the wave of staff cuts in the tech sector in recent months amid the market downturn.
The on-demand pay provider cut 10% of its workforce in August, The Information reported.
Meanwhile, Chime said it plans to lay off about 150 people, or 12% of its 1,300-person workforce, a move co-founder and CEO Chris Britt said would allow the company to flourish “regardless of market conditions,” according to an internal memo seen by TechCrunch.
A Chime spokesperson told Banking Dive last month the layoffs were “an incredibly tough decision,” and one they take “very seriously.”
“To ensure the long-term success of the business and as we look at current market dynamics, we are focusing our organization to be fully aligned with our company priorities,” the spokesperson said. “As a result, we are eliminating some positions, while still hiring for select others.”
