4 ms·

so it sounds like a gamble on what brex expects that actual return to be

• gpm 4y ago
  All lending is a gamble, but if they only lend 25% of what you have stored with SVB it's (approximately) a gamble that the FDIC will pay out more than 25c on the dollar. Which as lending goes is a pretty safe gamble.
• toomuchtodo 4y ago
  It's a gamble not only on what's recoverable but also future lifetime value of newly acquired customers from this effort (remember, there are a bunch of ventures looking for a new bank now that their banking provider is gone). Public service meets rapidly evolving growth marketing campaign. Can't fault Brex, there is no downside to anyone except them (correction: it appears a third party is taking the credit risk per gpm, even better for Brex as they're simply facilitating the lending ops and aren't exposing themselves to the credit risk). Kudos.
  • gpm 4y ago
    > Can't fault Brex, there is no downside to anyone except them. Not actually clear who is taking the downside > This credit line is funded by 3rd-party capital (and not Brex directly)
• tedivm 4y ago
  Brex isn't making the gamble, they're just managing it- > This credit line is funded by 3rd-party capital (and not Brex directly), who are working with Brex to minimize the impact of this event to the startup ecosystem. It sounds like a bunch of VCs are gambling on the return, while also knowing it helps stabilize the system that built (and likely holds, in some way or another) their wealth.
  • svnt 4y ago
    The run, predominantly by VCs, is what destabilized the bank. In a regime of rising interest rates this gives them pricing power on the loans where they were just passive depositors previously. Since SVB loans were essentially only to companies who were already customers of these VCs, you could view this move fairly cynically.