Brex Pivots Away From Small Business Customers, Toward Startups
Brex app on phones

Brex Pivots Away From Small Business Customers, Toward Startups

A FinTech on the rise has announced a major shakeup that will see them actively repelling many current customers. Last week, Brex revealed that it was moving away from serving general small businesses and would instead refocus its platform to serve startups — specifically those who have already received venture capital or other funding. The company has already been sending emails to affected customers, informing them that their accounts will be shut down as of August 15th.

In their FAQ about the move, Brex wrote, “We can no longer serve small business customers that are not pre-seed or have not received venture funding. However, if you are currently fundraising or plan to fundraise, or are part of the startup community (crypto, angel investor, VC, etc.) please reach out.” Meanwhile, in a Twitter thread detailing the company’s decision, co-founder and co-CEO Pedro Franceschi stated, “We know how painful it is to switch financial services in a moment like now, and we’re giving customers two months to migrate. We’re also working with all affected customers to make this process as smooth as possible.”

As TechCrunch recalls, Brex was originally founded as a corporate card solution for startups as well as small businesses. In turn, a majority of the firm’s revenue came from interchange fees collected when customers utilized their debit cards. However, more recently, Brex has made a push into software-as-a-service as a means of diversifying its revenue while building better tools for its users. With these efforts, the company has been gaining significant investment, raising a $300 million round earlier this year, which valued the FinTech at $12.3 billion. To date, Brex has raised a total of $1.5 billion.

Notably, some of these funds went toward attracting small business customers with bonuses and similar incentives. Brex’s other co-founder and co-CEO Henrique Dubugras acknowledged as much, telling CNBC, “It’s terrible. It’s the worst outcome for us, too. We invested so much money in acquiring these customers, serving them, building the brand, all these things.”

Brex’s decision has seemingly left an opening for other FinTechs to make their move and attract so-to-be-former Brex customers. Among them, Relay Financial has launched a promotion directly targeting affected small business owners, offering them $150 for switching to their service. This bonus is valid as long as new customers deposit at least $1 and share proof that they are being impacted by Brex’s pivot by sending a copy of their account closure notice to the firm.

This move from Brex is the latest example of less-than-stellar news coming from the FinTech industry. In addition to several cryptocurrency firms enduring what’s been dubbed the “crypto winter,” other startups have recently reported decreased valuations. Of course, this comes as the United States economy as a whole is seemingly at a turning point. Ultimately, while Brex’s decision is certainly surprising and does seem foreboding in the greater context, this pivot doesn’t mean that the FinTech as a whole is bound for a correction after a record-breaking year — although things could definitely get interesting as the second half of the year unfolds.

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox

A Guide to Building Credit and Increasing Your Credit Scores

When it comes to credit, there’s some good news. The average credit score in the United States has been steadily rising in recent years, coming in at 715 in 2023. That may be because, today, consumers not only have more ways to access their credit reports and scores than ever before but also because there are an increasing number of options that Americans have for building credit in the first...

2024 SoFi Checking and Savings Review

Ever since I started taking an interest in the FinTech sector, one company whose name I’ve seen pop up over and over again is SoFi. Lately it seems as though that theme has been sent into overdrive as the company has not only become a household name thanks to its stadium naming rights deal but also because of the company’s continued product expansions. The most interesting development in my mind...
Brim logo

Brim Financial Raises $85 Million as It Eyes Global Expansion

Toronto-based FinTech infrastructure startup Brim Financial has announced a new funding round. About the round: Brim has revealed an $85 million round. The Series C was led by EDC Investments while new investor Vistara Growth and returning investors White Owl Group, Epic Ventures, and Zions Bank also participated. To date, the company has now raised $110 million including a Series B in 2021. According to Brim, the latest funding will...
Chase Freedom Flex card

Chase Reveals Q2 2024 Freedom 5%(+) Bonus Categories

Chase has announced its bonus category picks for the second quarter of 2024 — including some interesting twists. About the categories: As April approaches, Chase has revealed what categories Freedom and Freedom Flex cardholders can earn bonuses on. From April 1st through June 30th, customers can earn 5% (or more) in three categories: Amazon.com, Hotels, and Restaurants. Similar to how Chase embraced a "New Year, New Me" theme last quarter,...
Rent Day

Bilt Announces Home Collection Deal for May 2024 Rent Day

For May's Rent Day, Bilt is offering a deal that will allow members to decrease their rent bill while also adding to their home decor. About the Home Collection offer: Bilt has crafted a unique Rent Day offer for May 2024. Through the 1st, when Bilt members redeem their points toward rent payments, they'll receive the same number of points to be used toward Bilt Home Collection items. To take...