Jason Lee, the entrepreneur who cofounded the payroll service DailyPay, is selling his latest startup, Salt Labs, to neobank Chime Financial. Roughly all of Salt’s 22 employees will join Chime, including Lee, who will lead a new business unit. The deal, which is expected to close later this week, calls for Chime to provide an upfront payment of $14 million, according to people familiar with the deal.
The transaction also includes an earnout where the Salt team can earn over time an equity package of up to 0.9% of Chime stock if they achieve certain performance metrics, they said. Nearly the entire deal is stock-based. The full earnout, together with the cash payment, means the total price of the transaction could be $173 million, but this is contingent on Lee and the Salt team hitting lofty performance targets, according to two different people familiar with the transaction. Chime declined to comment on deal terms.
Founded in 2022, Salt Labs is a loyalty payments company focused on the nation’s roughly 79 million hourly workers, which typically include restaurant, grocery store, and construction workers as well as some nurses. Under Salt’s rewards program, employees earn “salt” for every hour they work and can exchange it for various rewards, including payment toward a special purchase or a savings product.
Salt, which is based in New York, has collected $18 million in funding, according to a June 2 blog post. This includes an $8 million seed round in December 2023 that valued the startup at $80 million.
The sale to Chime represents a surprising second act for Lee, who spent nearly 17 years at Goldman Sachs, where he was most recently co-head of the structured equity group and global head of convertibles. Lee left Goldman in September 2014, roughly a year after he was accused of raping a young woman in an East Hampton rental home, according to the New York Times. Lee, who maintained his innocence throughout the trial, was found not guilty of the charges in April 2015, the Daily Mail said. Separately, the district attorney who prosecuted Lee is currently serving five years in jail for helping to cover up a police assault.
Later in 2015, Lee and Robert Law, a serial entrepreneur, cofounded DailyPay, a software firm that helps employees access their wages in real time. In 2021, during the height of the venture boom, DailyPay attained unicorn status when its valuation soared to more than $1 billion. Chime, in 2021, also saw its fortune flourish when it was valued at $25 billion. (The terms of the $173 million deal for Salt imply a $16 billion valuation for Chime.)
A step closer to a Chime IPO
As CEO of DailyPay, Lee encountered fundraising challenges. Some venture capitalists told Coins2Day that they refused to invest in DailyPay due to the Hamptons scandal. Documents also show that DailyPay’s board fired Lee for cause in June of 2022, claiming the executive, among other things, shared confidential information with Chime.
The next year, in 2022, Chime offered to buy DailyPay for $1.6 billion and then bumped its bid to $2 billion, Coins2Dayreported in March 2023. DailyPay’s investors rejected the proposal in the hopes the future would bring a higher bid, the story said.
Rather than chasing high-net-worth individuals, Chime caters to consumers making less than $100,000. The fintech is buying Salt because the company believes current financial products offered by employers don’t let workers achieve an adequate level of financial independence, according to Mark Troughton, Chime’s chief operating officer.
Chime, one of the biggest fintechs, is expected to go public next year but has been criticized for its failure to diversify beyond its D2C model. Chime has seven million customers, offering fee-free checking and savings accounts, as well as debit cards. In May, it introduced an earned-wage-access product, MyPay, which allows eligible Chime users to get up to $500 in wages before payday without having to pay interest, fees, or go through a credit check. (But MyPay users must have a direct deposit account with Chime.) More than 2 million people have signed up to use MyPay, which will be generally available later this summer.
With the acquisition, Lee will become head of Chime enterprise, which will target businesses rather than consumers. “The goal is to help employers offer a better suite of financial services to their employees, so that we can develop primary account relationships with those employees,” Troughton said. The acquisition will also help reposition Chime for the IPO, one of the sources told Coins2Day.
Troughton, when asked specifically about the allegations against Lee, said he’s gotten to know the founding Salt team, including Lee, “really, really well” over the past two years. “We feel that they are a group with high integrity and high talent and capability that they’ve proven through their successes,” he said.