Venture Capital: Brex, the Credit Card Provider for Startups, Raises $150M

May 21, 2020 | FinTech, News, Venture Capital
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It’s a strategic move to bolster its balance sheet and “play offensive while everyone else plays defensive.”

Brex, the fintech which sells credit cards to startups, eCommerce companies, and life sciences companies, raised $150 million from Lone Pine Capital and a group of existing investors led by DST. (PYMNTS.com)

The startup also offers Brex Cash, a product that startups can use as a checking account. Last month, in the face of the COVID-19 crisis, it announced Brex 1, a credit card that operates with a one-day repayment schedule, and is available to Brex Cash customers only. Venture-backed startups get access to 30-day credit on their corporate cards.

Brex and the COVID crunch

The fintech noticed that customers were spending much less in the crisis environment, even after implementing lay-offs. This crimps revenues for Brex because it earns commissions on card spending.

The company also trimmed customer credit limits and cut its own expense on advertising, travel, and restaurants.

Objectives of the latest funding

The new funding will boost its cash resources and balance sheet, and enhance its standing across banks and financial partners. Brex is also eyeing strategic acquisitions and plans to deploy more capital for developing its engineering, product, and design functions.

The latest financing will take Brex’s total financed amount to $465 million.

“We’re glad to have additional capital at a time when customers need us to be focused 100% on providing services and solutions to help them navigate these challenging economic times,” said Henrique Dubugras, Co-Founder and Co-CEO of Brex, in a statement.

The latest raise is more strategic than anything else. “I’m glad this round came together, but if it hadn’t, we would’ve been fine,” Dubugras said to TechCrunch. “The capital is so we can play offensive while everyone else plays defensive.”

Brex raised $200 million in debt financing in December.

It, nevertheless, extended its cash runway as a safety measure. “We can never be too careful, that was number one … we didn’t know how long this will last so this was a sign of precaution,” Dubugras told Business Insider.

The funding valued Brex, which is all of three years old, at “around the $3 billion mark,” according to Dubugras.

Related Story:  Payments Unicorn Stripe Raises $600 Million at a $36 Billion Valuation

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