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A financial company is going to extend 10x as much credit as established institutions (without collateral) to random startup execs? And two other selling points

A financial company is going to extend 10x as much credit as established institutions (without collateral) to random startup execs? And two other selling points being that they're writing a financial platform from scratch and you'll get your card more quickly so your business doesn't fail from waiting on the mailman to deliver a normal business credit card? The APR would have to be sky-high and would start accruing the day after. There's a reason banks don't give a shitload of money to just anyone who can pay ~$1,000 form a corporation. Are they going to write fraud detection from the ground-up too? Same with all of the customer support apps that allow reps to deal with issues? This makes no sense to me. The risk here seems stratospheric unless "Visa Commercial" is already offering all of these, and Brex is just re-branding it. Edit: Pagar.me would count as financial experience. I missed that sentence in the article.

philip1209 8y ago
> is going to extend 10x as much credit as established institutions (without collateral) to random startup execs? There functionally is collateral. They monitor your bank account, you need min $50K in cash in it, and they only extend credit that's something like a quarter of your cash balance. It's a charge card, so you can't carry a balance. It makes a lot of sense for cash-rich startups. The model doesn't work (in this form) for many small businesses.
- CPLX 8y ago
  So basically it’s a product for valley startup type companies that just closed rounds of financing, but don’t yet have sophisticated financial controls and cash management and banking relationships? That makes a lot more sense, but is that really a large addressable market? Is the idea to beat Amex with reporting?
  - philip1209 8y ago
    I think the idea is "cash is all the trust we need." It's parallel to Square or Stripe. "Is getting a merchant account really that hard?" Yes, it turns out it is. It's the same thing with credit cards - you shouldn't have to personally guarantee your company's credit. It also competes directly with the expense market. If everybody can have a controlled company card, why do you need expense software?
- skinnymuch 8y ago
  Ah I didn’t realize you need $50K minimum in your bank account. That changes things quite a bit, but also makes sense for them.
nikhizzle 8y ago
As a correction, they previously built and sold a company in this space with a large amount of traction.
- Novashi 8y ago
  That's correct, my fault
deleted 8y ago
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philip1209 8y ago

> is going to extend 10x as much credit as established institutions (without collateral) to random startup execs? There functionally is collateral. They monitor your bank account, you need min $50K in cash in it, and they only extend credit that's something like a quarter of your cash balance. It's a charge card, so you can't carry a balance. It makes a lot of sense for cash-rich startups. The model doesn't work (in this form) for many small businesses.

CPLX 8y ago
So basically it’s a product for valley startup type companies that just closed rounds of financing, but don’t yet have sophisticated financial controls and cash management and banking relationships? That makes a lot more sense, but is that really a large addressable market? Is the idea to beat Amex with reporting?
- philip1209 8y ago
  I think the idea is "cash is all the trust we need." It's parallel to Square or Stripe. "Is getting a merchant account really that hard?" Yes, it turns out it is. It's the same thing with credit cards - you shouldn't have to personally guarantee your company's credit. It also competes directly with the expense market. If everybody can have a controlled company card, why do you need expense software?
skinnymuch 8y ago
Ah I didn’t realize you need $50K minimum in your bank account. That changes things quite a bit, but also makes sense for them.

nikhizzle 8y ago

As a correction, they previously built and sold a company in this space with a large amount of traction.

Novashi 8y ago
That's correct, my fault

deleted 8y ago

[deleted]