Financial Services Company Brex Raises $425 Million
Financial services company Brex announced today that they have raised $425 million in Series D funding. With this announcement, Brex's evaluation jumped to $7.4 billion, double what it was just a year ago. Tiger Capital led this round of funding along with a slew of old and new investors. New investors included TCV, GIC, Baillie Gifford, Madrone Capital Partners, Durable Capital Partners LP, Valiant Capital Management, and Base10, while returning investors included Y Combinator Continuity, Ribbit Capital, DST Global, Greenoaks Capital, Lone Pine Capital, and IVP.
Since its founding in 2017 out of the Y Combinator accelerator program, Brex has grown at a dizzying pace. The San Franciso-based company started out by offering corporate cards to venture-backed businesses but quickly expanded its product offering to meet a wide range of additional small business needs. The company now offers a myriad of cash management tools, simplifying the process for small businesses and making it easier for them to handle their own finances. The company strives to create an all-in-one system, giving small businesses more options outside of traditional banks, which usually cater their products and services to larger businesses.
The company is one of many unicorns in the fintech space that have attracted significant attention. Valued at less than $1 billion in 2018, the company's expansion of product and service offerings as well as its strong execution has made the company a favorite in Silicon Valley. Revenue has grown rapidly as well, even in the face of COVID-19. In fact, Brex has stated that during the pandemic, a record number of individuals and businesses have signed up for their services, as more small businesses than ever before have been started during the pandemic. In just the first three months of 2021, the company has already increased its customer base by 80%. Brex Co-CEO Henrique Dubugras stated that “this new investment round will fuel our growth as we continue to build out an all-in-one financial solution for all businesses.”
All in one approach
Alongside the news of this capital raise, Brex also announced a new product offering called Brex Premium. Coined an “all-in-one finance solution”, the software provides business owners with a solution to help with cash management. Features include expense reporting, personal reimbursements, and the tracking of expenses across organizational teams. Overall, the suite of features will replace many of the services traditional banks provide to small businesses. The product will cost $49 dollars a month. Brex is marketing their Premium product as a way for small business owners to gain peace of mind and to have more time doing other work that will help them grow their business.
This news follows a February 2021 announcement that Brex had submitted an application with the Federal Deposit Insurance Corporation (FDIC) to establish a bank named Brex Bank. The bank will be located in Utah and operate as a subsidiary to Brex. If approved, the bank will allow small businesses to access credit and deposit products that are FDIC insured. With a combination of bookkeeping and banking services, Brex's product offerings have the potential to upend the traditional financial sector and transform the way businesses manage their finances.