Pre-IPO pedia | Born for startups, ambitious Brex will become Amex 2.0？

It is said that 50% of startups will fail within five years. So it's common for startups to be hard to borrow money. Brex saw a business opportunity in it and became a well-known unicorn in the field.

Just five years after its founding, Brex is valued at $12.3 billion, making it the world's eighth-largest fintech unicorn, according to research firm Crunchbase.

In 2021, the company has more than 10k customers, annual revenue reached 320 million US dollars, and credit card transactions reached 12 billion US dollars.

How did the two 25-year-old men build this 10B unicorn? IPO Buzz will take you to the story of Brex.

Brazilian Pedro Franceschi was the first person in the world to discover a way to jailbreak the iPhone 3G, and is a scarce talent in IOS security.

In 2012, at the age of 16, he has already worked for M4U, Brazil's largest mobile payment company at that time.

In the same year, he met and became friends with Henrique Dubugras on Twitter. Henrique Dubugras is also Brazilian and at the same age as Pedro Franceschi.

Realizing the inefficiency and inconvenience of Internet payment at that time, they founded Pagar.me in 2013.

After only six months in school and being selected by Y Combinator, the two decided to drop out of school and start a business again. Brex did not start as a fintech startup but rather as a VR startup.

However, the founders pivoted the company three weeks into Y Combinator's 12-week accelerator program. They found that their real interest was in the payment industry.

In 2017, combining their previous experience in the field of financial technology and the network of entrepreneurs established over the years, they founded Brex.

They decided to focus on solving the debt and fee control problems of early-stage technology companies. Obviously, they succeeded again.

Brex found that it was difficult for startups to apply for corporate credit card accounts from large banks because of their lacked assets and high operational risks.

Even if they can apply, the long application process means a high time cost for startups in the period of rapid growth and expansion.

Unlike traditional corporate credit cards, which are cumbersome and strict, Brex's credit cards take an average of five minutes to approve, do not require guarantees, and have a credit limit 10-20 times higher than other credit cards.

At the same time, the credit card does not require service fees and is interest-free for one month.

These policies provide many conveniences for startups that are not yet mature in all aspects, and quickly open up the market for Brex.

The company will launch a cash management platform integrating financial accounting, ERP management, cross-border transfer, property insurance, financial investment and other functions, which further enriches the platform functions.

Since its inception, Brex has experienced 11 rounds of financing, with major investors including Tiger Global Management, DST Global, Y Combinator, Ribbit Capital and Credit Suisse.

Several actions that are highly concerned by the market include:

On March 20, 2017, Brex received $120,000 seed round financing from Y Combinator and other investors.

On April 1, 2017, Brex received a $7 million A round of financing led by Ribbit Capital and followed by Y Combinator.

On June 19, 2018, Brex received a $50 million B round of financing led by Y Combinator.

In April 2021, Brex received $425 million in Series D financing led by Tiger Global Management.

Just five years after its founding, Brex has confirmed that it has raised $300 million in a Series D-2 round that ups its valuation to $12.3 billion on January 11, 2022. In conjunction with the funding announcement, Brex also announced that it has hired away an exec from Meta: Karandeep Anand.

Brex makes most of its money from credit card fees and transaction fees. When enterprises apply for credit cards and accounts, they enjoy five free applications, and they have to pay a monthly service fee of $5 per account or credit card for the excess.

Brex will also take a certain percentage of the commission from the transactions that users use Brex Card to pay and share it with the cooperative payers, which is the main part of Brex's revenue.

In April last year, Brex also developed a service called Brex Premium, which enables bill management, fast payment and reimbursement for enterprises based on two major APPs.

The service charges $49 a month. Brex said it would continue to focus on developing more new products to provide users with a convenient financial operating system to meet the multiple needs of modern enterprises.

According to Owler's database, Brex's revenue in 2019 is estimated to be about $15.2 million.

It is reported that Brex's revenue reached 320 million US dollars in 2021, an increase of 90% over 2020.

Brex doesn't plan to go public "anytime soon," co-CEO Henrique Dubugras said Wednesday during an event on March 2, 2022.

"I think we would only consider going public in a good market. We're not anti-going public or anything, but we're still a five-year-old company and I think it's very normal for companies to wait until they're eight or nine years old. "He said.

Mooers, have you ever used Brex? Are you optimistic about the development prospects of this kind of preferential business for startups? When do you think Brex will go public? Follow me to join the latest discussion!