FinTech: Brex Dumps Thousands Of Small Business Customers In Rejig
Brex will now focus on venture-backed technology startups and larger companies.
Brex, the Silicon Valley-based lender to small and medium sized businesses and startups, has announced a shift in its business priorities. It will now focus only on venture-backed technology startups and larger companies. Announced last week, the change puts tens of thousands of small businesses on notice to find an alternative provider by August 15. (CNBC)
“Brex has made the difficult decision to stop serving traditional small businesses. The needs of this market are very different from our core customer base of technology startups and larger companies. Small business customers deserve a partner who is entirely focused on their needs, and we don’t feel we can adequately serve them moving forward,” Brex said in a post.
Co-founder Henrique Dubugras explained the rationale for the pivot to CNBC. As a result of the massive turbulence in the financial markets, it had become necessary for startups and the larger Brex customers to quickly focus on profitability instead of merely growth. This group of customers therefore had more need for the company’s services such as expense control and hiring. Unfortunately, the financial crunch also equally impacted the SMBs, who also demanded more help from Brex to counter the situation.
Brex quickly found its resources were stretched.
“We got to a situation where we realized that if we didn’t choose one, we would do a poor job for both” groups of clients, Dubugras said. “So we decided to focus on our core customer that are the start-ups that are growing.”
However, Dubugras clarified that the firm did not take the step from fear of SMBs potentially defaulting on their corporate credit cards. There was no risk on this count because small businesses had to repay their cards on a daily basis.
Related Story: FinTech: Brex Acquires Pry Financials For $90M
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