Quick Notes On The Impending Brex Round

It’s common knowledge now that Brex, a credit company targeting market verticals including startups, is hunting fresh capital. That the round Brex is currently pulling together could value it at $2 billion is media-catnip to boot.

The company raised $125 million last October, valuing itself at $1.1 billion, post-money. Brex also raised $100 million in debt this year. But all that is old-hat now. There’s more money coming in, so let’s get our bearings.

Just Brex It

Here’s the company’s narrative as it stands today: Brex, a Y Combinator-backed startup, is one of the fastest-ever companies to a $1 billion valuation. And, even more, it’s managed its growth and hot pricetag by doing two things that buck conventional wisdom. Namely, it has spent money on old-fashioned advertising and it’s building a business by lending to startups.

Each of those choices is not as weird as you’d imagine. I spoke with Brex CEO Henrique Dubugras earlier this year, affording me the chance to ask about each. Regarding the bus stop ads and other sorts of IRL advertising, Dubugras said that cheap inventory is good. That’s frankly hard to argue with as other startups try to eke out positive ROAS on the well-wrung Facebook ad market.

And regarding lending to startups, Brex has a good view into the businesses it lends to, so it isn’t blind; Brex can remove access to credit if a customer is running light on capital.

Now, that’s just what I understand about the company. Reality is never neat, and you can’t accurately summarize risks and their posited amelioration in 87 words or whatever, but you get the idea.

So Hot

Brex’s growth figures must be bonkers for it to manage to raise as much as it has. The firm is hot.

So, we’ll have more on the round as we learn more about it. What we can tell for now is that the Brex boom in the startup world must have been something to behold from an operating perspective. And on that theme, I’ll leave you with this riff from TechCrunch’s Kate Clark on the company and its history:

The company’s pace of growth is unheard of, even in Silicon Valley where inflated valuations and outsized rounds are the norm. Why? Brex has tapped into a market dominated by legacy players in dire need of technological innovation and, of course, startup founders always need access to credit. That, coupled with the fact that it’s capitalized on YC’s network of hundreds of startup founders — i.e. Brex customers — has accelerated its path to a multi-billion-dollar price tag.

Illustration: Li-Anne Dias.