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This is my understanding as well, but what I don't yet understand is why this would apparently work well for Brex but not for the banks. Part of me has wondered

This is my understanding as well, but what I don't yet understand is why this would apparently work well for Brex but not for the banks. Part of me has wondered whether it's some kind of VC-subsidized strategy to make a risk play that doesn't pan out actuarially, sort of like what Uber does with fares. Can anyone explain this?

mifeng 6y ago
I'm a co-founder of a 15-person startup. We switched our banking and credit cards from Chase to Brex about a year ago and it's just lot better - UX, fees, data, perks, etc.
deleted 6y ago
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toomuchtodo 6y ago
Brex minimizes their risk by offering a charge card versus a revolving line of credit. They also require access to your corporate bank account for liquid assets information to dynamically extend credit. This allows them to have a more nimble, forward looking-ish risk model rather than legacy institutions that rely primarily on credit histories. This allows Brex to capture card transaction fees from financial services other banks ignore (again, due to risk models), such as startup charge cards.
- throwawaygh 6y ago
  > Brex minimizes their risk by offering a charge card versus a revolving line of credit. They also require access to your corporate bank account for liquid assets information to dynamically extend credit. For how many businesses is "a charge card for 15% of your cash balance and you're responsible for fraud" substantively different from just using a debit card? (Genuine question -- this isn't a market I realized even exists.)
  - toomuchtodo 6y ago
    30-60 day float plus cash back rebates (1-7 points per dollar depending on spend category). Whether that provides you value is up to your business requirements and cash flow constraints. If you can’t get working capital otherwise (venture backed pre revenue), it’s probably not a bad deal. I’d probably still go with Amex corporate cards and a personal guarantee, based on personal preference, a deep credit file, and a desire to outsource spend exception handling to the bank.
MaxGabriel 6y ago
SVB, a popular bank for startups, started offering a card with no personal liability https://www.svb.com/business-banking/business-credit-card/svb-innovators-card https://www.svb.com/business-banking/business-credit-card/sv... and Stripe’s card also has no personal liability https://stripe.com/corporate-card?utm_campaign=paid_brand-US_Search_Brand_CorpCard-6499379182&utm_medium=cpc&utm_source=google&ad_content=382065891592&utm_term=stripe%20corporate%20card&utm_matchtype=e&utm_adposition=&utm_device=m&gclid=EAIaIQobChMIi5Kvq_Pf6QIV1eDICh3gKAatEAAYASAAEgIjQPD_BwE https://stripe.com/corporate-card?utm_campaign=paid_brand-US... I think the reason large banks haven’t offered this yet is they’re not very catered to startups, which might have a large balance but no credit history (either as a business, or because the founders are young or foreign). (My company somewhat competes with Brex cash but doesn’t offer a charge card or credit card product)

mifeng 6y ago

I'm a co-founder of a 15-person startup. We switched our banking and credit cards from Chase to Brex about a year ago and it's just lot better - UX, fees, data, perks, etc.

deleted 6y ago

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toomuchtodo 6y ago

Brex minimizes their risk by offering a charge card versus a revolving line of credit. They also require access to your corporate bank account for liquid assets information to dynamically extend credit. This allows them to have a more nimble, forward looking-ish risk model rather than legacy institutions that rely primarily on credit histories. This allows Brex to capture card transaction fees from financial services other banks ignore (again, due to risk models), such as startup charge cards.

throwawaygh 6y ago
> Brex minimizes their risk by offering a charge card versus a revolving line of credit. They also require access to your corporate bank account for liquid assets information to dynamically extend credit. For how many businesses is "a charge card for 15% of your cash balance and you're responsible for fraud" substantively different from just using a debit card? (Genuine question -- this isn't a market I realized even exists.)
- toomuchtodo 6y ago
  30-60 day float plus cash back rebates (1-7 points per dollar depending on spend category). Whether that provides you value is up to your business requirements and cash flow constraints. If you can’t get working capital otherwise (venture backed pre revenue), it’s probably not a bad deal. I’d probably still go with Amex corporate cards and a personal guarantee, based on personal preference, a deep credit file, and a desire to outsource spend exception handling to the bank.

MaxGabriel 6y ago

SVB, a popular bank for startups, started offering a card with no personal liability https://www.svb.com/business-banking/business-credit-card/svb-innovators-card https://www.svb.com/business-banking/business-credit-card/sv... and Stripe’s card also has no personal liability https://stripe.com/corporate-card?utm_campaign=paid_brand-US_Search_Brand_CorpCard-6499379182&utm_medium=cpc&utm_source=google&ad_content=382065891592&utm_term=stripe%20corporate%20card&utm_matchtype=e&utm_adposition=&utm_device=m&gclid=EAIaIQobChMIi5Kvq_Pf6QIV1eDICh3gKAatEAAYASAAEgIjQPD_BwE https://stripe.com/corporate-card?utm_campaign=paid_brand-US... I think the reason large banks haven’t offered this yet is they’re not very catered to startups, which might have a large balance but no credit history (either as a business, or because the founders are young or foreign). (My company somewhat competes with Brex cash but doesn’t offer a charge card or credit card product)