Neobank Chime acquired employee savings startup Salt Labs in a deal that could give the smaller fintech's investors up to 0.9% of Chime should they hit specific performance targets.
Why it matters: This puts Chime in position to go head to head with earned-wage access players like DailyPay, which offer such products through employers rather than directly to consumers.
State of play: Salt Labs pitches itself as an employee retention tool to employers, letting workers earn rewards for every hour worked. Its CEO, Jason Lee, was previously CEO at DailyPay.
- Chime is expected to eventually offer MyPay, which is still in waitlist mode, through Salt Labs' platform.
- Lee will stay on as head of Chime Enterprise, while 25-30 employees are also expected to move over.
What they're saying: "The goal for us ultimately is to is to approach employers and to offer them a suite of products which could include earned-wage access and Salt ... and use that to engage the employees in a way that we're then able to turn those employees into primary customers," says Chime COO Mark Troughton.
In other words: Chime sees the acquisition as another path to acquiring customers.
Context: This comes after Chime reportedly sought to buy DailyPay for as much as $2 billion in 2022 but was spurned, per the Information.
- Instead, Chime launched an early paycheck product known as MyPay last month, offered directly to consumers. The offering requires that users set up direct deposit — effectively making it the all-important primary bank account.
The bottom line: The deal gives the company its first enterprise-facing business.
By the numbers: Two sources with direct knowledge of the matter confirmed that the deal includes $14 million in net cash, with the potential to earn out up to 0.9% of all Chime shares over several years.
- Salt Labs investors including Fin Capital already rolled some of their shares in the company, with one source confirming that the deal implied a $16 billion valuation, or $40 per share price for Chime. Fortune previously reported on some financials of the deal.
- But two other sources dispute the figure, saying the valuation came in below $15 billion. But it's unclear how they reached that number.
- All preferred-stock Salt investors have made back their principal and then some, per one source.
- Not all Salt investors have rolled over their shares.
The big picture: Chime was last valued at about $25 billion in 2021 and is said to be gearing up for a 2025 IPO.
- Launched in 2023, Salt has raised $18 million in its lifetime from investors including Third Prime and Anthem Ventures.
The intrigue: Fortune's Wednesday report stated that the deal could be as high as $173 million — but three sources tell Axios that's not exactly accurate.
- Sources with knowledge of the matter say that the 0.9% of Chime shares has no cap based on valuation — meaning the ballpark figure would be correct at a valuation of around $16 billion, but the total potential value of the deal could be higher or lower depending on Chime's valuation when the shares are earned.
