When Brex CEO Henrique Dubugras first started out as an entrepreneur, his first destination wasn’t finance — it was virtual reality (VR) technology. But that changed when he went to try and get a corporate card for his firm and found that it was a bigger-than-intended hassle.
Cards were hard to access, and he would have to put up a large personal guarantee to be issued one. Working with a debit product linked to a corporate checking account, he found, wasn’t really an improvement, as it would be a card and it would be a product that only he could use. Getting another card for Brex Co-founder Pedro Franceschi, he found, was actually a complicated hassle.
And, he noted, they had money to spend — $120,000 in the bank. They just couldn’t find a card product to help them spend it.
“We’re like, ‘hey, this seems broken,’” Dubugras noted in an interview with PYMNTS.
And so they decided to build Brex to try to fix the problem, with the goal of building a card product for startups like theirs that have money in the bank and no easy way to spend it.
The product Brex offers is basically a corporate charge card — the firm extends credit to startups based on the amount of money in their corporate bank accounts. Brex doesn’t offer a revolving line of credit; holders must pay back their balance in full within the billing period.
Those corporate bank accounts have to be flush.
It is a product that is ideally suited, according to Dubugras, to startups that have a sizable sum of investment dollars backing them — perhaps a few million in the bank — who aren’t really looking for a card that extends them credit. They don’t need access to capital; they need a way to better spend what’s in the bank, as well as to adequately track, manage and view their spending across cards.
Those funds, Dubugras noted, can go toward all kinds of purposes, such as travel, corporate events and Amazon Web Services subscription. The goal is to offer a charge product that businesses can use against a variety of expenses that is easier to access than its counterparts in the market. Instead of a paperwork-heavy and lengthy process, Brex quickly and digitally approves the startups who apply and instantly issues their charge cards for use — no personal guarantees required.
After two years in the market, the startup has been successful in drawing investor interest. Brex recently raised $125 million in venture funding and now nets a $1.1 billion valuation. The latest round follows $50 million raised in June.
Going forward, Dubugras noted, growth will be the firm’s main priority — particularly in its technological stack, which he noted the firm is building out from scratch instead of relying on traditional processors. That extra construction means they can build more functionality around expense management within the system for users.
They are also looking to pursue relationships with larger, enterprise-sized players. That is a pretty big attempted leap — today, the firm mostly focuses its efforts on small- and medium-sized startups, mostly within Northern California. Taking on much larger firms will put the startup in direct competition with very established players like American Express.