11 ms·

Capital One to acquire Brex for $5.15B

387 points by personjerry 9mo ago

Archive link: https://archive.md/vk8ov https://archive.md/vk8ov Capitol One statement: https://investor.capitalone.com/news-releases/news-release-details/capital-one-acquire-brex https://investor.capitalone.com/news-releases/news-release-d... Brex statement: https://www.brex.com/journal/brex-and-capital-one-join-forces https://www.brex.com/journal/brex-and-capital-one-join-force...

rishabhparikh 9mo ago
Tough outcome for many involved given peak valuation @ 12B
- billsunshine 9mo ago
  For many?
  - hazyc 9mo ago
    many/most employees
    - tyre 9mo ago
      Employees get options at common stock prices. The valuations you see, like $12bn, are for preferred stock. So no employees got stock priced at $12bn, but all of them get paid at a $5.15bn valuation. Not saying they did well, but depending on the 409a valuations, they still might have made money. Edit: friends, if you’re going to downvote please leave a comment as to why. It’s okay to disagree! There’s a lot of misleading FUD in these discussions about equity. It’s helpful for everyone to hear those sides.
      - singron 9mo ago
        Their options should be priced lower, but the common stock isn't valued according to the $5.15B. They raised $300M at $12B and $425M at $7.4B, which are both under water, so those shareholders will use their liquidation preference to get paid at least 1x. Assuming those rounds owned 7% of the company, there is at most $4.4B left for the remaining 93% of shareholders. That's about 8% less. If they deducted fees, legal services, or retention packages or had worse liquidation preferences or more underwater rounds, then it gets even lower.
      - jt2190 9mo ago
        > Employees get options at common stock prices. More specifically, when employees are granted options contracts the strike price of those contracts is based on the last valuation of the company prior to the grant. If all is going well and the valuation is increasing those options are also increasing in value. Here we have a sale which values the company lower than the prior valuation. Recent option grants will likely be underwater, earlier grants would still be profitable. > The valuations you see, like $12bn, are for preferred stock. No, the valuation is for the whole company, all of its shares, preferred and common. How this value is distributed among shareholders depends on the deal, but generally there is a “seniority”, roughly: creditors (debt holders) are paid first, preferred shares next, then common shareholders last. This order can be negotiated as part of the sale. > So no employees got stock priced at $12bn, but all of them get paid at a $5.15bn valuation. It’s just not possible to know what each individual employee’s outcome is. We don’t know how much of that 5.5 billion will be left over for common shareholders including the employees. Note that employees have received salaries so their overall outcome is greater than zero dollars, but perhaps their total compensation outcome is lower than they hoped for the time they put in. > Not saying they did well, but depending on the 409a valuations, they still might have made money. Yes, some might have and some might have not. We just don’t know without more details. Edit: singron’s answer (sibling comment) attempts to model the employee outcome in a rough but reasonable way.
        tyre 9mo ago
        The way they get to $12.5bn is multiplying the preferred share price by the total outstanding shares. But the common shares, while still included in that calculation, are not worth the same amount of money. They have a different strike price for options that is set via a 409a. It’s possible that employees got, at the peak, grants with strike prices at a $2bn 409a valuation. We don’t know. What we do know is that no employee ever got grants with a strike price of a $12.5bn valuation. That’s just not how this works.
rvz 9mo ago
This looks like a bad deal for Brex as they were valued at 12 billion. Capital One got a nice discount.
toomuchtodo 9mo ago
https://www.ycombinator.com/companies/brex https://www.ycombinator.com/companies/brex https://www.clay.com/dossier/brex-funding https://www.clay.com/dossier/brex-funding https://www.brex.com/ https://www.brex.com/
htrp 9mo ago
Fintech trading poorly. Also Brex didn't successfully make the AI pivot like their competitors at Ramp
- toomuchtodo 9mo ago
  Fintech exuberance was a symptom of zirp. Brex enabled more credit to folks who couldn't otherwise get credit without a personal guarantee. Zirp and exuberance is over at this point in the credit super cycle. AI doesn't help those fundamentals. Valuations are trending towards fundamentals (based on interest rates, discounted cash flows, etc). Capital One is paying a fair price for the customer base and infra imho to add to their business customer portfolio. Congrats to Brex et el on their incredible journey.
- solumos 9mo ago
  Fintech of that cohort is trading poorly, if they haven't found a way to survive post-ZIRP. Many have not.
fairity 9mo ago
Why are people saying this seems like a bad deal? If they really only raised $1.7b, per Crunchbase, then this seems to me like a very good outcome for everyone involved except its late stage investors. And, even for the late stage investors, they're breaking even.
- htrp 9mo ago
  I assume if you put in 100 mn at a 12 bn valuation in the last round, you're either getting 100 back at 1x pref or you're screwing over the common even more? Considering the 12bn round was back in 21, I'd expect most of the employee base to be taking a haircut on the value of their options.
  - bmau5 9mo ago
    assume it's the $1.2bn paid back to investors and then some divvying of the remaining amongst investors, founders, and common
    - deleted 9mo ago
      [deleted]
- blindriver 9mo ago
  No. The last two investment tranches will get back their money, based on 1X liquidation preference. Employees who joined in the last 5 years if they got options are fucked. If they have RSUs then they will take a fraction of their equity. It sounds like investors got out okay, but employees got fucked big time. It's a terrible exit and Brex waited too long until their growth stalled.
  - Ancalagon 9mo ago
    Hopefully those who joined took the all-cash option when that was still available.
  - throwawa1 9mo ago
    Silicon Valley seems gamed against employees - it gets worse every year. Companies don't even share the cap table (including many YC companies).
churchill 9mo ago
Pretty steep haircut from their $12b peak in 2022. And that's before you factor in their revenue that's grown 2.5* from ~$312M in 2022. If their figures are to be believed, Capital one is getting an asset growing 50% YoY, for just 7* revenues. Maybe just pull a Bending Spoons after the acquisition, layoff most of the staff, and bring a lot of ops in-house and they'll be in profit ASAP.
- aluminussoma 9mo ago
  If growth rate was really 50% YoY, their investors would not let them sell for $5 billion.
- xeromal 9mo ago
  Not sure what's gonna happen to them of course, but C1 doesn't really layoff the entire team like that. They have a few acquisitions that merge in but often stay as their own business unit and have a fair amount of autonomy.
ChrisArchitect 9mo ago
Brex post: https://www.brex.com/journal/brex-and-capital-one-join-forces https://www.brex.com/journal/brex-and-capital-one-join-force...
bmau5 9mo ago
Feels like a great outcome for Brex. Mercury and Ramp seem to have been chipping away at their leadership position in recent years, so I wonder how their growth trajectory changed over that period.
- MarkusAllen 9mo ago
  Most people at Brex will lose on this. Let's talk about “Liquidation preference”. Means investors get paid before founders during an exit. The basic math: investors get their money back first, then everyone else splits what’s left. Usually 1 times. Sometimes 2 times or 3 times. Occasionally, “participating preferred”... get money back PLUS percentage of remaining proceeds. This means founders can build a $100 million company and get nothing when it’s acquired if venture capitalists structured it right. Here’s how it works in a typical acquihire: The startup raised $10 million. Gets “acquired” for $15 million. Sounds like a win. The liquidation waterfall: Venture capitalists get their liquidation preference first: $10 million. Legal fees and transaction costs: $2 million. Retention bonuses for engineers: $2.5 million. Founder compensation: $500,000 vesting over 3 years. Early employees who built everything: $0. The $15 million exit becomes: Investors made whole. Lawyers paid. The acquirer got talent locked for 4 years. The founder got $500K spread over 3 years. Employees got nothing. In a real exit, liquidation preferences get worse with multiple rounds. Series A investors: 1 times preference on $5 million. Series B investors: 1.5 times preference on $15 million. Series C investors: 2 times participating preferred on $40 million. The company sells for $100 million. Series C gets $80 million for their preference. Plus 30% of the remaining $20 million. Total: $86 million. Series B wants $22.5 million. But only $14 million remains after Series C. Series A gets $0. Founders get $0. Employees get $0. The company sold for $100 million. Late investors took it all. That’s liquidation preferences. The structure venture capitalists use to ensure they extract regardless of the outcome. Build a $50 million company? Liquidation preferences eat it. Build a $100 million company? Liquidation preferences eat it. Build a $500 million company? Finally, maybe founders see something. But most companies never reach $500 million. So most founders never see anything. The preference isn’t protection. It’s extraction by design. Real-world example: Brex. On January 22, 2026, Capital One announced the acquisition of Brex for $5.15 billion. Brex was last valued at $12.3 billion in 2022. 58% down round. $7.15 billion vanished. But the real damage happens in distribution. Brex raised hundreds of millions across multiple rounds. Late-stage investors who invested at the peak $12.3 billion valuation have senior liquidation preferences. The waterfall likely looks like: Series D/E investors: 1 to 2 times preference on $300+ million. Series C investors: 1 times preference on prior rounds. Series A/B investors: 1 times preference on early rounds. Total preferences could easily exceed $3 to 4 billion. Leaving $1 to 2 billion for common stockholders. Founders and employees hold common stock. After 8 years building a company “worth” $12.3 billion that sold for $5.15 billion, the founders might walk away with a fraction of what they expected. Or nothing at all. Meanwhile: Pedro Franceschi, co-founder and CEO, gets to keep working... for Capital One now. Venture capitalists get their preferences paid. Capital One gets the business. Build a $12 billion company. Sell for $5 billion. Watch preferences eat everything. The founders who built it get whatever’s left after investors take their cut. That’s liquidation preferences in the real world. Not hypothetical. Happening right now. But wait... Won’t founder Pedro be fine? Probably better than employees, yes. Here’s the extraction hierarchy: Capital One negotiates a management retention pool. Pedro gets carved out before liquidation preferences hit. Part of his payout comes as a retention bonus, not equity distribution. He likely sold shares during secondary markets at peak valuation. Translation: Pedro probably walks away with low 8-figures plus a retention package. Not zero. But nowhere near “co-founder of $12 billion company” money. Who gets destroyed: Early employees with common stock options: $0. Mid-stage employees who joined at $5 to 8 billion valuation: $0. Late employees who joined at $12.3 billion valuation: negative. Underwater options. Engineers who turned down Google... $300K salary plus $500K stock. For Brex... $180K plus equity “worth millions”. Just lost everything. The real extraction: Pedro built an independent fintech company. Raised billions. Hired hundreds. Served thousands of customers. Now he’s a Capital One employee for the next 3 to 5 years. Can’t leave. Retention package clawback. Can’t compete. Non-compete clause. Can’t build independently. Golden handcuffs locked. He traded “founder of Brex” for “division president at Capital One.” The money he gets is real. The freedom he loses is worth more. The pyramid: Top: Late-stage investors. Get preferences, exit clean. Middle: Founder/CEO. Gets some payout, loses independence. Bottom: Employees. Get nothing, lose jobs, or become Capital One workers. Liquidation preferences don’t just determine money. They determine who keeps their freedom. Investors: always free to move to the next deal. Founder: locked into the acquirer for years. Employees: lucky to have a job offer. Pedro won’t starve. But he’s not independent anymore. That’s the extraction that doesn’t show up in the press release.
paxys 9mo ago
Sold for $5.15B. Brex last raised $300M in Oct 2021 at a $12.3B valuation.
- rvz 9mo ago
  That is a 50% discount, which isn't great for those who got into the latest round. Seems like Capital One is very excited on the deal and announced it earlier while Brex hid the announcement and made it hard to find. (It's on the Brex [0] journal directory, but you cannot see it featured on its front page) What (really) happened? [0] https://www.brex.com/journal https://www.brex.com/journal
  - hn_throwaway_99 9mo ago
    Its not great for those who got in later rounds, but I would assume all the investors had at least 1X preferences, so they'll at least get all their money back. I think this is a pretty decent outcome for Brex. I read they received a total of 1.3 billion in funding, so a 5.15 billion exit isn't bad, especially since the bottom dropped out of the market for so many fintechs that were founded and had big raises between 2015 and 2021.
    - itake 9mo ago
      I'm curious how the employees faired. Seems like they may bet getting nothing out of the deal if the investors get their money back.
      - Carrok 9mo ago
        We know how the employees did. Same as ever. They got whatever slop was left in the trough after the big pigs ate their share. Bitter about VCs? Me? Never.
      - rahimnathwani 9mo ago
        Brex has been around for a long time, so employees will have been issued stock options with vastly different exercise prices. Early employees' options will have value, but more recent options are likely underwater.
verdverm 9mo ago
They refused my business because I didn't have SV VC money Chase got it instead, but they are losing it next month because of their shenanigans and greed Wish crypto hadn't been co-opted by the same people and worse
- logicallee 9mo ago
  I see you getting downvotes, but can you elaborate a little on what happened? What kind of business did you mean? If you don't want to share more here, you can email me.
  - verdverm 9mo ago
    Typical HNer, started a startup around some tech. Brex refuses to do business, even though I had positive cash flow, they apparently only have clients with VC funding. (at least at the time, I don't know if they later changed their policy.
    - toomuchtodo 9mo ago
      If you don’t mind me asking, who are you moving to? (in the industry, but not at a startup)
      - verdverm 9mo ago
        Probably over correcting to a local bank lol I'm doing a consolidation / rebrand around the verdverm pseudonym this year
  - molsongolden 9mo ago
    In 2022, Brex shifted away from SMB to refocus their offering. They cut "tens of thousands" of SMB customers who didn't fit their new ICP. They announced this in June 2022 and gave all of those customers 2mo to find a new provider and move their funds. The new qualifications to be a Brex customer at that time were: > Received an equity investment of any amount (accelerator, angel, VC or web3 token); > More than $1 million a year in revenue; > More than 50 employees; > More than $500k in cash; > Tech startups who are on a path to meeting the criteria above, and are referred by an existing customer or partner.
tschellenbach 9mo ago
Feels like they were first in the space but then somehow Ramp ran away from dev with a higher dev pace. Fascinating to see.
- ipnon 9mo ago
  Personally I'm okay with being outcompeted if their's a billion dollar payout at the end.
  - throwup238 9mo ago
    Everything that's wrong with venture capitalism condensed into a single fifteen word sentence. Bravo. If you can't provide a billion dollars worth of value, extract a billion dollars worth of grift! I hear A16Z is hiring.
    - skrebbel 9mo ago
      How is being outcompeted “grift”? I feel like I’m missing some context here.
      - DSingularity 9mo ago
        Why do you start a startup? Is it to build an idea you believe in and believe it is potentially lucrative or is it so you can go through the motions, say the trendy things, and get outcompeted because in the end you are primarily focused on getting acquired with a 1B exit?
        qeternity 9mo ago
        Spoken like someone who has never started a business. Brex raised much less than $5b and Capital One apparently thinks it is worth more than that (otherwise they wouldn’t buy it). This is called value creation.
        9mo ago
blindriver 9mo ago
The investors all have liquidity preferences so the ones that invested at higher valuations didn't lose any money. But all employees after 2021 are underwater. I wonder if they got any relief from management or if they got screwed.
- logicallee 9mo ago
  do you know, is that 1x?
  - tfehring 9mo ago
    Not publicly disclosed as far as I'm aware, but likely 1x. In Q4 2021 when Brex last raised, only ~3% of rounds had >1x liquidation preference according to Carta. https://carta.com/data/state-of-private-markets-q2-2024/ https://carta.com/data/state-of-private-markets-q2-2024/
asdev 9mo ago
Ramp valued at $32B is a joke. Hopefully this sets a realistic benchmark for valuation. All Ramp did was spend more on ads and marketing. And CEO is now claiming their "AI Agents" are going to do something meaningful.
- echelon 9mo ago
  If Ramp is getting all the business, is there any reason to think they wouldn't command a much higher valuation? Brex killed a ton of their customer relationships to "refocus" on larger biz. That created a lot of negative sentiment for the brand. > All Ramp did was spend more on ads and marketing That's distribution. It matters. Ramp has a much more synonymous name, better recognition, and less bad reputation.
  - another_twist 9mo ago
    Distribution is king. Kudos to Ramp for that. My weird thesis is that for whatever reason Ruby on Rails shops just seem to survive more. I wonder if someone did a stack specific survival rate analysis.
    - okhobb 9mo ago
      Pretty sure Ramp uses Elixir.
      - deleted 9mo ago
        [deleted]
      - another_twist 9mo ago
        the Ruby on Rails of Erlang, I guess. Maybe we just generalize the thesis to - the stack must be the ruby on rails of X language.
        okhobb 9mo ago
        I'll give that and agree the underlying is a quibble.
whalesalad 9mo ago
Years ago I took a chance on hiring an engineer fresh out of a software bootcamp. Turned out to be one of the best engineers I have ever worked with - so much tenacity and thirst for learning new things. They went on to join Brex when the company was just starting out. What an awesome exit!
- SaltyBackendGuy 9mo ago
  Hopefully they had the confidence/insight to negotiate properly. I went through BN$ exit (was employee 19) early in my career and unfortunately, only select people at the top got retirement money. The most frustrating part was the Big Co. execs that came in much later, did literally nothing, and got a massive payday. Lesson learned though...
  - ghxst 9mo ago
    That really sucks. Any advice on how to "negotiate properly" to avoid a situation like this?
    - Ancalagon 9mo ago
      whatever they value their options at in negotiations, multiply that by 0.1-0.25 to get the real value in the best outcome for a late stage startup (series B-C+) as a common employee
    - lotsofpulp 9mo ago
      Without information about the cap table and liquidation preferences, assume the cash you are getting is the only compensation you will receive. To make it easier, if you are not using your lawyer during negotiations, I would assume the cash portion is the only compensation.
    - OGEnthusiast 9mo ago
      Just assume startup equity will be worthless (which it almost always is).
- 9mo ago
ori_b 9mo ago
I guess it's not a bad Brexit.
- deleted 9mo ago
  [deleted]
- fuzztester 9mo ago
  there are no good brexits, bro. god promise.
- jollyllama 9mo ago
  Pretty wild that they picked that as their name AFTER Brexit began.
testfrequency 9mo ago
Does this mean Stripe is worth $1B?
- aluminussoma 9mo ago
  Different businesses. Stripe main business is a payment processor. Brex provides credit.
  - bflesch 9mo ago
    From website footer: > Brex is a financial technology company, not a bank. The Brex business account consists of Checking, a commercial checking account provided by Column N.A., Member FDIC, and Treasury and Vault, cash management services provided by Brex Treasury LLC, Member FINRA/SIPC.
    - echelon 9mo ago
      Stripe is a much bigger business with hands in all sorts of instruments, chiefly payments processing. Do you know how many businesses move money on Stripe rails? It's wild.
- bflesch 9mo ago
  Stripe has for years helped non-EU companies to do tax fraud in the EU, and in a just world their management would be charged. Every time a customer in the EU pays with Stripe, they exactly know if they are a private customer or not and in which country that customer is located in. Stripe also knows who the counterparty is ("their merchant"). Yet Stripe systematically enabled their merchants to avoid paying appropriate VAT for sales to private customers in the EU. The merchants would send you a "receipt" and then go dark, no proper invoice provided and no appropriate VAT payments to the EU made. Their merchants could write fantasy names on the invoices, Stripe would not check or correct anything. They simply ignored the whole Mini-One-Stop-Shop in terms of VAT. That's the "benefit" of using Stripe, they had very happy merchants who didn't need to pay taxes when selling digital products to EU customers. I had to light a very big fire under their ass for them to provide proper invoices. I have zero indication they systematically remediated the tax fraud situation and actually paid the EU the VAT that Stripe merchants owe if you'd look into Stripe's accounting.
LgWoodenBadger 9mo ago
Capitalone is going to need something to make up for switching all their debit cards from MasterCard to Discover
- weird-eye-issue 9mo ago
  Who in the world uses debit cards
  - apparent 9mo ago
    People who don't have credit? I used a debit card at one point, though I don't anymore. But also, they're looking at moving their credit cards to Discover as well, which would make huge waves (both in the credit card/banking world, and for their customers, who would probably find it very annoying).
    - johnebgd 9mo ago
      I’d just drop them.
    - xp84 9mo ago
      I suspect the play they're making is that putting millions of new Discover cards out there will be a tipping point, pressuring the remaining merchants who don't take it, as a play to break the Visa/MC duopoly. This could be not that hard to pull off. American Express historically was less accepted because of their high fees, but I don't think Discover has or had that problem.
      - pc86 9mo ago
        Maybe I just don't use it enough but I can really only remember one time in the last ~15 years that I've tried to use my Discover card and been told they don't take Discover. I wonder if there's a geographical component, or if certain industries are less likely to take anything other than Visa/MC?
        9mo ago
swyx 9mo ago
Brex's CTO recently came on LS to talk about their AI strategy and tech: https://latent.space/p/brex https://latent.space/p/brex
- takahisah 9mo ago
  Great pod. Timing wise he had to have known about it during recording, but he didn't give anything away.
  - swyx 9mo ago
    he actually did not! came together quickly. https://x.com/jamesreggio/status/2014520219847557619?s=20 https://x.com/jamesreggio/status/2014520219847557619?s=20
nemath 9mo ago
Should they have continued growing for a while before selling or was now the best ever time?
- browningstreet 9mo ago
  Economy’s maybe at risk… see housing starts esp.
- Ancalagon 9mo ago
  I feel like one of their primary investors wanted out. It was probably not the opportune time considering the cost of money right now.
  - echelon 9mo ago
    Do you think the founders were strong-armed and are pissed at this outcome?
    - Ancalagon 9mo ago
      while not the most ideal outcome, the founders likely have large numbers of priority shares and will see a significant payout
  - derektank 9mo ago
    Is there any reason to think the cost of money is going to improve at all in the foreseeable future?
    - Ancalagon 9mo ago
      well, yes, if Trump gets his way and gets a crony as the FED chair, interest rates will probably go very low
      - derektank 9mo ago
        The federal funds rate is not directly tied to commercial interest rates. If Trump actually does get his way and begins cutting the over night rate, I would actually expect investors to demand higher yields on US treasuries and commercial bonds, given it indicates the federal reserve is likely to allow inflation to increase, possibly by quite a lot
deleted 9mo ago
[deleted]
- ecb_penguin 9mo ago
  [dead]
nikolay 9mo ago
So, they got Greenlight, Discover, and now - Brex. They are turning into a financial powerhouse.
- VK-pro 9mo ago
  As if they weren’t before?
1vuio0pswjnm7 9mo ago
Alternative to archive.md: https://www.msn.com/en-gb/money/other/capital-one-strikes-5-15-billion-brex-deal-quarterly-profit-rises-on-interest-income-boost/ar-AA1ULTnJ/ https://www.msn.com/en-gb/money/other/capital-one-strikes-5-... Text-only: https://assets.msn.com/content/view/v2/Detail/en-in/AA1ULTnJ/ https://assets.msn.com/content/view/v2/Detail/en-in/AA1ULTnJ...
moomoo11 9mo ago
so are the founders and employees fucked? wasn't this company valued at like 12b?
- piyh 9mo ago
  comparison is the thief of joy
  - moomoo11 9mo ago
    That makes no sense here. I’m wondering if founders and employees will lose out on any upside. Considering the payouts will go to them after the investors.
mockbuild 9mo ago
[flagged]
0x100001011 9mo ago
Conditional anti-trust approval reflecting NXP unsolicited bid. https://web.archive.org/web/20190827190311/https://www.wsj.com/articles/qualcomm-set-to-win-european-backing-for-39-billion-nxp-buy-1515673776 https://web.archive.org/web/20190827190311/https://www.wsj.c...
kwanbix 9mo ago
More consolidation. What the end user needs.
yalogin 9mo ago
Wow why did it go for so much less than the last valuation? Is the overall market turning bad or is it just a Brex thing?
- pm90 9mo ago
  Investors will only invest in AI plays. They don’t seem to care for fintech.
  - jgalt212 9mo ago
    Probably true, but our fintech still gets tons of unsolicited emails from growth equity shops. I don't respond because as you mentioned this sector is out of favor, and as such the multiples are not worth my time.
    - htrp 9mo ago
      thats just top of funnel, the instant you respond the terms start to become very very unfriendly
      - toomuchtodo 9mo ago
        Indeed, cold outreach is to get you excited and then once you're in the weeds, your value is going to get crammed down.
  - KellyCriterion 9mo ago
    ...and Blockchain!
    - PlatoIsADisease 9mo ago
      Was this ever a thing? I know individual investors get pretty crazy for blockchain, but I don't recall any major companies doing big investments. At most, I was asked about it briefly, explained what the usecases were, and it never came up again.
nokun7 9mo ago
That's less than half of Brex's crazy $12.3 billion peak back in 2022. But honestly, it’s still one of the biggest fintech deals ever and actually gives people real money in a market where most unicorns are just stuck. The founders are reportedly splitting about $1 billion each, early investors (2017-2018) are getting 12-80x returns, and YC’s tiny $120k seed turned into ~$100 million (800x, insane TBH). Even later folks (especially the 2021-2022 crowd) are breaking even (at least) or getting a little upside thanks to some 2024 RSU top-ups.
- Klonoar 9mo ago
  “Breaking even” on what? The cost to exercise? Or the missed opportunity cost of going somewhere else?
  - nokun7 9mo ago
    What I mean is that later employees—especially the ones who joined during the 2021–2022 hype when Brex was valued at that crazy $12.3 billion peak—got their RSU grants priced at those very high levels. That meant their equity was basically "underwater" once valuations crashed post-2022; the shares they were promised wouldn’t pay out much (or anything meaningful) unless the company somehow got back to those crazy heights. To keep people from jumping ship and to make things feel fairer, IIRC in 2024 Brex did some RSU "top-ups" - basically, they handed out extra shares at the much lower current valuation to compensate for the drop and give those folks a better shot at actually making some real money or "breaking even".
panny 9mo ago
Capital One are scumbags. I'm glad they are dying and spending their money on dying companies at the same time. Less than half valuation, lol.
- another_twist 9mo ago
  Stock up 15% up YoY. That company isnt dying by any measure. They just acquired a business banking company on the cheap.
- astura 9mo ago
  They are doing the opposite of dying, the are among the largest credit issues in the US https://money.usnews.com/credit-cards/articles/biggest-us-credit-card-companies-this-year https://money.usnews.com/credit-cards/articles/biggest-us-cr... This list counts Discover separately, but Discover is owned by CapitalOne now.
CatsOnHats 9mo ago
Brex literally came to us one day in 2022, and notified us that "We have 6 weeks to move everything off their service" they told us boldly they are refocusing on the enterprise market and we were only a "SMB". The guy who literally told us this framed it as a good thing for us like it was some sort of weird break up. At the time we had signed a large enterprise agreement not long before that, and we even were advertised as a enterprise customer testimonial. When we mentioned that he said it was final. They ghosted us apparently and from what i heard a bunch of companies were the same somehow no longer acceptable for their services. I had a friend who worked for a very large F500 company who also got a similar treatment. Ironically i had a friend a tiny crypto startup that somehow was allowed to stay despite not meeting their requirements.
- disillusioned 9mo ago
  That's weird. I remember the great SMB cleavering, where they spiked anyone that was, say, a small brick & mortar, preferring to focus on firms that were more pure tech and higher average balances. I've banked with Brex for, I don't know, 5 or 6 years now, and somehow dodged that, but it was concerning at the time since migrating operating accounts is an enormous pain in my ass. This was made a bit more annoying when they lost their magical single operating cash sweep account and forced you to split to a separate Treasury account in order to earn interest. Even with auto balance shifting rules, I've had a few transactions fail because of bad timing. (And ACH is scheduled at the same time an intra-bank transfer is scheduled, but the ACH processes overnight and intra-bank has to wait until market open.) Super obnoxious.
  - gotem 9mo ago
    Yeah it's actually been quite horrific how many (albeit rare but severe) payroll payments, rent payments, or large scheduled vendor payments we were a day late on because of the moronically dumb transfer rules. We also had minimum balance enforcement and even then it would often somehow magically screw up. Or having to double login to Brex to first do a transfer from treasury and then wait hours to then login and schedule the ACH. Anyways will never use Brex again after all that annoyance.
- 9mo ago
giorgioz 9mo ago
Brex rejected my application to open a bank account in 3 different occasion. mercury.com provided me the B2B account within the day and the product and UX is awesome.
- artembugara 9mo ago
  +1 for Mercury. Another good thing about Mercury is that in case you’re stuck/not being treated fairly, you can just email/publicly mention Immad (CEO) and he’ll reply within minutes and will look into this
B1FIDO 9mo ago
Mavis Beacon Approved https://m.xkcd.com/2206/ https://m.xkcd.com/2206/
ixxie 9mo ago
Brexit 2.0
deleted 9mo ago
[deleted]
elzbardico 9mo ago
[flagged]
- bflesch 9mo ago
  That's incorrect way of typing "tax fraud by US tech companies is theft from European citizens".
pizzathyme 9mo ago
Congrats to the Brex team and the YC partners that supported them!
SaaSasaurus 9mo ago
Brex CEO Pedro Franceschi gets bonus points for using the phrase “maximize founder mode” in a press release sentence that also includes “mainstream economy.” Really, it's an elite-level vibe straddle.

387 points by personjerry 9mo ago

rishabhparikh 9mo ago

Tough outcome for many involved given peak valuation @ 12B

billsunshine 9mo ago
For many?
- hazyc 9mo ago
  many/most employees
  - tyre 9mo ago
    Employees get options at common stock prices. The valuations you see, like $12bn, are for preferred stock. So no employees got stock priced at $12bn, but all of them get paid at a $5.15bn valuation. Not saying they did well, but depending on the 409a valuations, they still might have made money. Edit: friends, if you’re going to downvote please leave a comment as to why. It’s okay to disagree! There’s a lot of misleading FUD in these discussions about equity. It’s helpful for everyone to hear those sides.
    - singron 9mo ago
      Their options should be priced lower, but the common stock isn't valued according to the $5.15B. They raised $300M at $12B and $425M at $7.4B, which are both under water, so those shareholders will use their liquidation preference to get paid at least 1x. Assuming those rounds owned 7% of the company, there is at most $4.4B left for the remaining 93% of shareholders. That's about 8% less. If they deducted fees, legal services, or retention packages or had worse liquidation preferences or more underwater rounds, then it gets even lower.
    - jt2190 9mo ago
      > Employees get options at common stock prices. More specifically, when employees are granted options contracts the strike price of those contracts is based on the last valuation of the company prior to the grant. If all is going well and the valuation is increasing those options are also increasing in value. Here we have a sale which values the company lower than the prior valuation. Recent option grants will likely be underwater, earlier grants would still be profitable. > The valuations you see, like $12bn, are for preferred stock. No, the valuation is for the whole company, all of its shares, preferred and common. How this value is distributed among shareholders depends on the deal, but generally there is a “seniority”, roughly: creditors (debt holders) are paid first, preferred shares next, then common shareholders last. This order can be negotiated as part of the sale. > So no employees got stock priced at $12bn, but all of them get paid at a $5.15bn valuation. It’s just not possible to know what each individual employee’s outcome is. We don’t know how much of that 5.5 billion will be left over for common shareholders including the employees. Note that employees have received salaries so their overall outcome is greater than zero dollars, but perhaps their total compensation outcome is lower than they hoped for the time they put in. > Not saying they did well, but depending on the 409a valuations, they still might have made money. Yes, some might have and some might have not. We just don’t know without more details. Edit: singron’s answer (sibling comment) attempts to model the employee outcome in a rough but reasonable way.
      - tyre 9mo ago
        The way they get to $12.5bn is multiplying the preferred share price by the total outstanding shares. But the common shares, while still included in that calculation, are not worth the same amount of money. They have a different strike price for options that is set via a 409a. It’s possible that employees got, at the peak, grants with strike prices at a $2bn 409a valuation. We don’t know. What we do know is that no employee ever got grants with a strike price of a $12.5bn valuation. That’s just not how this works.

rvz 9mo ago

This looks like a bad deal for Brex as they were valued at 12 billion. Capital One got a nice discount.

toomuchtodo 9mo ago

https://www.ycombinator.com/companies/brex https://www.ycombinator.com/companies/brex https://www.clay.com/dossier/brex-funding https://www.clay.com/dossier/brex-funding https://www.brex.com/ https://www.brex.com/

htrp 9mo ago

Fintech trading poorly. Also Brex didn't successfully make the AI pivot like their competitors at Ramp

toomuchtodo 9mo ago
Fintech exuberance was a symptom of zirp. Brex enabled more credit to folks who couldn't otherwise get credit without a personal guarantee. Zirp and exuberance is over at this point in the credit super cycle. AI doesn't help those fundamentals. Valuations are trending towards fundamentals (based on interest rates, discounted cash flows, etc). Capital One is paying a fair price for the customer base and infra imho to add to their business customer portfolio. Congrats to Brex et el on their incredible journey.
solumos 9mo ago
Fintech of that cohort is trading poorly, if they haven't found a way to survive post-ZIRP. Many have not.

fairity 9mo ago

Why are people saying this seems like a bad deal? If they really only raised $1.7b, per Crunchbase, then this seems to me like a very good outcome for everyone involved except its late stage investors. And, even for the late stage investors, they're breaking even.

htrp 9mo ago
I assume if you put in 100 mn at a 12 bn valuation in the last round, you're either getting 100 back at 1x pref or you're screwing over the common even more? Considering the 12bn round was back in 21, I'd expect most of the employee base to be taking a haircut on the value of their options.
- bmau5 9mo ago
  assume it's the $1.2bn paid back to investors and then some divvying of the remaining amongst investors, founders, and common
  - deleted 9mo ago
    [deleted]
blindriver 9mo ago
No. The last two investment tranches will get back their money, based on 1X liquidation preference. Employees who joined in the last 5 years if they got options are fucked. If they have RSUs then they will take a fraction of their equity. It sounds like investors got out okay, but employees got fucked big time. It's a terrible exit and Brex waited too long until their growth stalled.
- Ancalagon 9mo ago
  Hopefully those who joined took the all-cash option when that was still available.
- throwawa1 9mo ago
  Silicon Valley seems gamed against employees - it gets worse every year. Companies don't even share the cap table (including many YC companies).

churchill 9mo ago

Pretty steep haircut from their $12b peak in 2022. And that's before you factor in their revenue that's grown 2.5* from ~$312M in 2022. If their figures are to be believed, Capital one is getting an asset growing 50% YoY, for just 7* revenues. Maybe just pull a Bending Spoons after the acquisition, layoff most of the staff, and bring a lot of ops in-house and they'll be in profit ASAP.

aluminussoma 9mo ago
If growth rate was really 50% YoY, their investors would not let them sell for $5 billion.
xeromal 9mo ago
Not sure what's gonna happen to them of course, but C1 doesn't really layoff the entire team like that. They have a few acquisitions that merge in but often stay as their own business unit and have a fair amount of autonomy.

ChrisArchitect 9mo ago

Brex post: https://www.brex.com/journal/brex-and-capital-one-join-forces https://www.brex.com/journal/brex-and-capital-one-join-force...

bmau5 9mo ago

Feels like a great outcome for Brex. Mercury and Ramp seem to have been chipping away at their leadership position in recent years, so I wonder how their growth trajectory changed over that period.

MarkusAllen 9mo ago
Most people at Brex will lose on this. Let's talk about “Liquidation preference”. Means investors get paid before founders during an exit. The basic math: investors get their money back first, then everyone else splits what’s left. Usually 1 times. Sometimes 2 times or 3 times. Occasionally, “participating preferred”... get money back PLUS percentage of remaining proceeds. This means founders can build a $100 million company and get nothing when it’s acquired if venture capitalists structured it right. Here’s how it works in a typical acquihire: The startup raised $10 million. Gets “acquired” for $15 million. Sounds like a win. The liquidation waterfall: Venture capitalists get their liquidation preference first: $10 million. Legal fees and transaction costs: $2 million. Retention bonuses for engineers: $2.5 million. Founder compensation: $500,000 vesting over 3 years. Early employees who built everything: $0. The $15 million exit becomes: Investors made whole. Lawyers paid. The acquirer got talent locked for 4 years. The founder got $500K spread over 3 years. Employees got nothing. In a real exit, liquidation preferences get worse with multiple rounds. Series A investors: 1 times preference on $5 million. Series B investors: 1.5 times preference on $15 million. Series C investors: 2 times participating preferred on $40 million. The company sells for $100 million. Series C gets $80 million for their preference. Plus 30% of the remaining $20 million. Total: $86 million. Series B wants $22.5 million. But only $14 million remains after Series C. Series A gets $0. Founders get $0. Employees get $0. The company sold for $100 million. Late investors took it all. That’s liquidation preferences. The structure venture capitalists use to ensure they extract regardless of the outcome. Build a $50 million company? Liquidation preferences eat it. Build a $100 million company? Liquidation preferences eat it. Build a $500 million company? Finally, maybe founders see something. But most companies never reach $500 million. So most founders never see anything. The preference isn’t protection. It’s extraction by design. Real-world example: Brex. On January 22, 2026, Capital One announced the acquisition of Brex for $5.15 billion. Brex was last valued at $12.3 billion in 2022. 58% down round. $7.15 billion vanished. But the real damage happens in distribution. Brex raised hundreds of millions across multiple rounds. Late-stage investors who invested at the peak $12.3 billion valuation have senior liquidation preferences. The waterfall likely looks like: Series D/E investors: 1 to 2 times preference on $300+ million. Series C investors: 1 times preference on prior rounds. Series A/B investors: 1 times preference on early rounds. Total preferences could easily exceed $3 to 4 billion. Leaving $1 to 2 billion for common stockholders. Founders and employees hold common stock. After 8 years building a company “worth” $12.3 billion that sold for $5.15 billion, the founders might walk away with a fraction of what they expected. Or nothing at all. Meanwhile: Pedro Franceschi, co-founder and CEO, gets to keep working... for Capital One now. Venture capitalists get their preferences paid. Capital One gets the business. Build a $12 billion company. Sell for $5 billion. Watch preferences eat everything. The founders who built it get whatever’s left after investors take their cut. That’s liquidation preferences in the real world. Not hypothetical. Happening right now. But wait... Won’t founder Pedro be fine? Probably better than employees, yes. Here’s the extraction hierarchy: Capital One negotiates a management retention pool. Pedro gets carved out before liquidation preferences hit. Part of his payout comes as a retention bonus, not equity distribution. He likely sold shares during secondary markets at peak valuation. Translation: Pedro probably walks away with low 8-figures plus a retention package. Not zero. But nowhere near “co-founder of $12 billion company” money. Who gets destroyed: Early employees with common stock options: $0. Mid-stage employees who joined at $5 to 8 billion valuation: $0. Late employees who joined at $12.3 billion valuation: negative. Underwater options. Engineers who turned down Google... $300K salary plus $500K stock. For Brex... $180K plus equity “worth millions”. Just lost everything. The real extraction: Pedro built an independent fintech company. Raised billions. Hired hundreds. Served thousands of customers. Now he’s a Capital One employee for the next 3 to 5 years. Can’t leave. Retention package clawback. Can’t compete. Non-compete clause. Can’t build independently. Golden handcuffs locked. He traded “founder of Brex” for “division president at Capital One.” The money he gets is real. The freedom he loses is worth more. The pyramid: Top: Late-stage investors. Get preferences, exit clean. Middle: Founder/CEO. Gets some payout, loses independence. Bottom: Employees. Get nothing, lose jobs, or become Capital One workers. Liquidation preferences don’t just determine money. They determine who keeps their freedom. Investors: always free to move to the next deal. Founder: locked into the acquirer for years. Employees: lucky to have a job offer. Pedro won’t starve. But he’s not independent anymore. That’s the extraction that doesn’t show up in the press release.

paxys 9mo ago

Sold for $5.15B. Brex last raised $300M in Oct 2021 at a $12.3B valuation.

rvz 9mo ago
That is a 50% discount, which isn't great for those who got into the latest round. Seems like Capital One is very excited on the deal and announced it earlier while Brex hid the announcement and made it hard to find. (It's on the Brex [0] journal directory, but you cannot see it featured on its front page) What (really) happened? [0] https://www.brex.com/journal https://www.brex.com/journal
- hn_throwaway_99 9mo ago
  Its not great for those who got in later rounds, but I would assume all the investors had at least 1X preferences, so they'll at least get all their money back. I think this is a pretty decent outcome for Brex. I read they received a total of 1.3 billion in funding, so a 5.15 billion exit isn't bad, especially since the bottom dropped out of the market for so many fintechs that were founded and had big raises between 2015 and 2021.
  - itake 9mo ago
    I'm curious how the employees faired. Seems like they may bet getting nothing out of the deal if the investors get their money back.
    - Carrok 9mo ago
      We know how the employees did. Same as ever. They got whatever slop was left in the trough after the big pigs ate their share. Bitter about VCs? Me? Never.
    - rahimnathwani 9mo ago
      Brex has been around for a long time, so employees will have been issued stock options with vastly different exercise prices. Early employees' options will have value, but more recent options are likely underwater.

verdverm 9mo ago

They refused my business because I didn't have SV VC money Chase got it instead, but they are losing it next month because of their shenanigans and greed Wish crypto hadn't been co-opted by the same people and worse

logicallee 9mo ago
I see you getting downvotes, but can you elaborate a little on what happened? What kind of business did you mean? If you don't want to share more here, you can email me.
- verdverm 9mo ago
  Typical HNer, started a startup around some tech. Brex refuses to do business, even though I had positive cash flow, they apparently only have clients with VC funding. (at least at the time, I don't know if they later changed their policy.
  - toomuchtodo 9mo ago
    If you don’t mind me asking, who are you moving to? (in the industry, but not at a startup)
    - verdverm 9mo ago
      Probably over correcting to a local bank lol I'm doing a consolidation / rebrand around the verdverm pseudonym this year
- molsongolden 9mo ago
  In 2022, Brex shifted away from SMB to refocus their offering. They cut "tens of thousands" of SMB customers who didn't fit their new ICP. They announced this in June 2022 and gave all of those customers 2mo to find a new provider and move their funds. The new qualifications to be a Brex customer at that time were: > Received an equity investment of any amount (accelerator, angel, VC or web3 token); > More than $1 million a year in revenue; > More than 50 employees; > More than $500k in cash; > Tech startups who are on a path to meeting the criteria above, and are referred by an existing customer or partner.

tschellenbach 9mo ago

Feels like they were first in the space but then somehow Ramp ran away from dev with a higher dev pace. Fascinating to see.

ipnon 9mo ago
Personally I'm okay with being outcompeted if their's a billion dollar payout at the end.
- throwup238 9mo ago
  Everything that's wrong with venture capitalism condensed into a single fifteen word sentence. Bravo. If you can't provide a billion dollars worth of value, extract a billion dollars worth of grift! I hear A16Z is hiring.
  - skrebbel 9mo ago
    How is being outcompeted “grift”? I feel like I’m missing some context here.
    - DSingularity 9mo ago
      Why do you start a startup? Is it to build an idea you believe in and believe it is potentially lucrative or is it so you can go through the motions, say the trendy things, and get outcompeted because in the end you are primarily focused on getting acquired with a 1B exit?
      - qeternity 9mo ago
        Spoken like someone who has never started a business. Brex raised much less than $5b and Capital One apparently thinks it is worth more than that (otherwise they wouldn’t buy it). This is called value creation.
        9mo ago

blindriver 9mo ago

The investors all have liquidity preferences so the ones that invested at higher valuations didn't lose any money. But all employees after 2021 are underwater. I wonder if they got any relief from management or if they got screwed.

logicallee 9mo ago
do you know, is that 1x?
- tfehring 9mo ago
  Not publicly disclosed as far as I'm aware, but likely 1x. In Q4 2021 when Brex last raised, only ~3% of rounds had >1x liquidation preference according to Carta. https://carta.com/data/state-of-private-markets-q2-2024/ https://carta.com/data/state-of-private-markets-q2-2024/

asdev 9mo ago

Ramp valued at $32B is a joke. Hopefully this sets a realistic benchmark for valuation. All Ramp did was spend more on ads and marketing. And CEO is now claiming their "AI Agents" are going to do something meaningful.

echelon 9mo ago
If Ramp is getting all the business, is there any reason to think they wouldn't command a much higher valuation? Brex killed a ton of their customer relationships to "refocus" on larger biz. That created a lot of negative sentiment for the brand. > All Ramp did was spend more on ads and marketing That's distribution. It matters. Ramp has a much more synonymous name, better recognition, and less bad reputation.
- another_twist 9mo ago
  Distribution is king. Kudos to Ramp for that. My weird thesis is that for whatever reason Ruby on Rails shops just seem to survive more. I wonder if someone did a stack specific survival rate analysis.
  - okhobb 9mo ago
    Pretty sure Ramp uses Elixir.
    - deleted 9mo ago
      [deleted]
    - another_twist 9mo ago
      the Ruby on Rails of Erlang, I guess. Maybe we just generalize the thesis to - the stack must be the ruby on rails of X language.
      - okhobb 9mo ago
        I'll give that and agree the underlying is a quibble.

whalesalad 9mo ago

Years ago I took a chance on hiring an engineer fresh out of a software bootcamp. Turned out to be one of the best engineers I have ever worked with - so much tenacity and thirst for learning new things. They went on to join Brex when the company was just starting out. What an awesome exit!

SaltyBackendGuy 9mo ago
Hopefully they had the confidence/insight to negotiate properly. I went through BN$ exit (was employee 19) early in my career and unfortunately, only select people at the top got retirement money. The most frustrating part was the Big Co. execs that came in much later, did literally nothing, and got a massive payday. Lesson learned though...
- ghxst 9mo ago
  That really sucks. Any advice on how to "negotiate properly" to avoid a situation like this?
  - Ancalagon 9mo ago
    whatever they value their options at in negotiations, multiply that by 0.1-0.25 to get the real value in the best outcome for a late stage startup (series B-C+) as a common employee
  - lotsofpulp 9mo ago
    Without information about the cap table and liquidation preferences, assume the cash you are getting is the only compensation you will receive. To make it easier, if you are not using your lawyer during negotiations, I would assume the cash portion is the only compensation.
  - OGEnthusiast 9mo ago
    Just assume startup equity will be worthless (which it almost always is).
9mo ago

ori_b 9mo ago

I guess it's not a bad Brexit.

deleted 9mo ago
[deleted]
fuzztester 9mo ago
there are no good brexits, bro. god promise.
jollyllama 9mo ago
Pretty wild that they picked that as their name AFTER Brexit began.

testfrequency 9mo ago

Does this mean Stripe is worth $1B?

aluminussoma 9mo ago
Different businesses. Stripe main business is a payment processor. Brex provides credit.
- bflesch 9mo ago
  From website footer: > Brex is a financial technology company, not a bank. The Brex business account consists of Checking, a commercial checking account provided by Column N.A., Member FDIC, and Treasury and Vault, cash management services provided by Brex Treasury LLC, Member FINRA/SIPC.
  - echelon 9mo ago
    Stripe is a much bigger business with hands in all sorts of instruments, chiefly payments processing. Do you know how many businesses move money on Stripe rails? It's wild.
bflesch 9mo ago
Stripe has for years helped non-EU companies to do tax fraud in the EU, and in a just world their management would be charged. Every time a customer in the EU pays with Stripe, they exactly know if they are a private customer or not and in which country that customer is located in. Stripe also knows who the counterparty is ("their merchant"). Yet Stripe systematically enabled their merchants to avoid paying appropriate VAT for sales to private customers in the EU. The merchants would send you a "receipt" and then go dark, no proper invoice provided and no appropriate VAT payments to the EU made. Their merchants could write fantasy names on the invoices, Stripe would not check or correct anything. They simply ignored the whole Mini-One-Stop-Shop in terms of VAT. That's the "benefit" of using Stripe, they had very happy merchants who didn't need to pay taxes when selling digital products to EU customers. I had to light a very big fire under their ass for them to provide proper invoices. I have zero indication they systematically remediated the tax fraud situation and actually paid the EU the VAT that Stripe merchants owe if you'd look into Stripe's accounting.

LgWoodenBadger 9mo ago

Capitalone is going to need something to make up for switching all their debit cards from MasterCard to Discover

weird-eye-issue 9mo ago
Who in the world uses debit cards
- apparent 9mo ago
  People who don't have credit? I used a debit card at one point, though I don't anymore. But also, they're looking at moving their credit cards to Discover as well, which would make huge waves (both in the credit card/banking world, and for their customers, who would probably find it very annoying).
  - johnebgd 9mo ago
    I’d just drop them.
  - xp84 9mo ago
    I suspect the play they're making is that putting millions of new Discover cards out there will be a tipping point, pressuring the remaining merchants who don't take it, as a play to break the Visa/MC duopoly. This could be not that hard to pull off. American Express historically was less accepted because of their high fees, but I don't think Discover has or had that problem.
    - pc86 9mo ago
      Maybe I just don't use it enough but I can really only remember one time in the last ~15 years that I've tried to use my Discover card and been told they don't take Discover. I wonder if there's a geographical component, or if certain industries are less likely to take anything other than Visa/MC?
      - 9mo ago

swyx 9mo ago

Brex's CTO recently came on LS to talk about their AI strategy and tech: https://latent.space/p/brex https://latent.space/p/brex

takahisah 9mo ago
Great pod. Timing wise he had to have known about it during recording, but he didn't give anything away.
- swyx 9mo ago
  he actually did not! came together quickly. https://x.com/jamesreggio/status/2014520219847557619?s=20 https://x.com/jamesreggio/status/2014520219847557619?s=20

nemath 9mo ago

Should they have continued growing for a while before selling or was now the best ever time?

browningstreet 9mo ago
Economy’s maybe at risk… see housing starts esp.
Ancalagon 9mo ago
I feel like one of their primary investors wanted out. It was probably not the opportune time considering the cost of money right now.
- echelon 9mo ago
  Do you think the founders were strong-armed and are pissed at this outcome?
  - Ancalagon 9mo ago
    while not the most ideal outcome, the founders likely have large numbers of priority shares and will see a significant payout
- derektank 9mo ago
  Is there any reason to think the cost of money is going to improve at all in the foreseeable future?
  - Ancalagon 9mo ago
    well, yes, if Trump gets his way and gets a crony as the FED chair, interest rates will probably go very low
    - derektank 9mo ago
      The federal funds rate is not directly tied to commercial interest rates. If Trump actually does get his way and begins cutting the over night rate, I would actually expect investors to demand higher yields on US treasuries and commercial bonds, given it indicates the federal reserve is likely to allow inflation to increase, possibly by quite a lot

deleted 9mo ago

[deleted]

ecb_penguin 9mo ago
[dead]

nikolay 9mo ago

So, they got Greenlight, Discover, and now - Brex. They are turning into a financial powerhouse.

VK-pro 9mo ago
As if they weren’t before?

1vuio0pswjnm7 9mo ago

Alternative to archive.md: https://www.msn.com/en-gb/money/other/capital-one-strikes-5-15-billion-brex-deal-quarterly-profit-rises-on-interest-income-boost/ar-AA1ULTnJ/ https://www.msn.com/en-gb/money/other/capital-one-strikes-5-... Text-only: https://assets.msn.com/content/view/v2/Detail/en-in/AA1ULTnJ/ https://assets.msn.com/content/view/v2/Detail/en-in/AA1ULTnJ...

moomoo11 9mo ago

so are the founders and employees fucked? wasn't this company valued at like 12b?

piyh 9mo ago
comparison is the thief of joy
- moomoo11 9mo ago
  That makes no sense here. I’m wondering if founders and employees will lose out on any upside. Considering the payouts will go to them after the investors.

mockbuild 9mo ago

[flagged]

0x100001011 9mo ago

Conditional anti-trust approval reflecting NXP unsolicited bid. https://web.archive.org/web/20190827190311/https://www.wsj.com/articles/qualcomm-set-to-win-european-backing-for-39-billion-nxp-buy-1515673776 https://web.archive.org/web/20190827190311/https://www.wsj.c...

kwanbix 9mo ago

More consolidation. What the end user needs.

yalogin 9mo ago

Wow why did it go for so much less than the last valuation? Is the overall market turning bad or is it just a Brex thing?

pm90 9mo ago
Investors will only invest in AI plays. They don’t seem to care for fintech.
- jgalt212 9mo ago
  Probably true, but our fintech still gets tons of unsolicited emails from growth equity shops. I don't respond because as you mentioned this sector is out of favor, and as such the multiples are not worth my time.
  - htrp 9mo ago
    thats just top of funnel, the instant you respond the terms start to become very very unfriendly
    - toomuchtodo 9mo ago
      Indeed, cold outreach is to get you excited and then once you're in the weeds, your value is going to get crammed down.
- KellyCriterion 9mo ago
  ...and Blockchain!
  - PlatoIsADisease 9mo ago
    Was this ever a thing? I know individual investors get pretty crazy for blockchain, but I don't recall any major companies doing big investments. At most, I was asked about it briefly, explained what the usecases were, and it never came up again.

nokun7 9mo ago

That's less than half of Brex's crazy $12.3 billion peak back in 2022. But honestly, it’s still one of the biggest fintech deals ever and actually gives people real money in a market where most unicorns are just stuck. The founders are reportedly splitting about $1 billion each, early investors (2017-2018) are getting 12-80x returns, and YC’s tiny $120k seed turned into ~$100 million (800x, insane TBH). Even later folks (especially the 2021-2022 crowd) are breaking even (at least) or getting a little upside thanks to some 2024 RSU top-ups.

Klonoar 9mo ago
“Breaking even” on what? The cost to exercise? Or the missed opportunity cost of going somewhere else?
- nokun7 9mo ago
  What I mean is that later employees—especially the ones who joined during the 2021–2022 hype when Brex was valued at that crazy $12.3 billion peak—got their RSU grants priced at those very high levels. That meant their equity was basically "underwater" once valuations crashed post-2022; the shares they were promised wouldn’t pay out much (or anything meaningful) unless the company somehow got back to those crazy heights. To keep people from jumping ship and to make things feel fairer, IIRC in 2024 Brex did some RSU "top-ups" - basically, they handed out extra shares at the much lower current valuation to compensate for the drop and give those folks a better shot at actually making some real money or "breaking even".

panny 9mo ago

Capital One are scumbags. I'm glad they are dying and spending their money on dying companies at the same time. Less than half valuation, lol.

another_twist 9mo ago
Stock up 15% up YoY. That company isnt dying by any measure. They just acquired a business banking company on the cheap.
astura 9mo ago
They are doing the opposite of dying, the are among the largest credit issues in the US https://money.usnews.com/credit-cards/articles/biggest-us-credit-card-companies-this-year https://money.usnews.com/credit-cards/articles/biggest-us-cr... This list counts Discover separately, but Discover is owned by CapitalOne now.

CatsOnHats 9mo ago

Brex literally came to us one day in 2022, and notified us that "We have 6 weeks to move everything off their service" they told us boldly they are refocusing on the enterprise market and we were only a "SMB". The guy who literally told us this framed it as a good thing for us like it was some sort of weird break up. At the time we had signed a large enterprise agreement not long before that, and we even were advertised as a enterprise customer testimonial. When we mentioned that he said it was final. They ghosted us apparently and from what i heard a bunch of companies were the same somehow no longer acceptable for their services. I had a friend who worked for a very large F500 company who also got a similar treatment. Ironically i had a friend a tiny crypto startup that somehow was allowed to stay despite not meeting their requirements.

disillusioned 9mo ago
That's weird. I remember the great SMB cleavering, where they spiked anyone that was, say, a small brick & mortar, preferring to focus on firms that were more pure tech and higher average balances. I've banked with Brex for, I don't know, 5 or 6 years now, and somehow dodged that, but it was concerning at the time since migrating operating accounts is an enormous pain in my ass. This was made a bit more annoying when they lost their magical single operating cash sweep account and forced you to split to a separate Treasury account in order to earn interest. Even with auto balance shifting rules, I've had a few transactions fail because of bad timing. (And ACH is scheduled at the same time an intra-bank transfer is scheduled, but the ACH processes overnight and intra-bank has to wait until market open.) Super obnoxious.
- gotem 9mo ago
  Yeah it's actually been quite horrific how many (albeit rare but severe) payroll payments, rent payments, or large scheduled vendor payments we were a day late on because of the moronically dumb transfer rules. We also had minimum balance enforcement and even then it would often somehow magically screw up. Or having to double login to Brex to first do a transfer from treasury and then wait hours to then login and schedule the ACH. Anyways will never use Brex again after all that annoyance.
9mo ago

giorgioz 9mo ago

Brex rejected my application to open a bank account in 3 different occasion. mercury.com provided me the B2B account within the day and the product and UX is awesome.

artembugara 9mo ago
+1 for Mercury. Another good thing about Mercury is that in case you’re stuck/not being treated fairly, you can just email/publicly mention Immad (CEO) and he’ll reply within minutes and will look into this

B1FIDO 9mo ago

Mavis Beacon Approved https://m.xkcd.com/2206/ https://m.xkcd.com/2206/

ixxie 9mo ago

Brexit 2.0

deleted 9mo ago

[deleted]

elzbardico 9mo ago

[flagged]

bflesch 9mo ago
That's incorrect way of typing "tax fraud by US tech companies is theft from European citizens".

pizzathyme 9mo ago

Congrats to the Brex team and the YC partners that supported them!

SaaSasaurus 9mo ago

Brex CEO Pedro Franceschi gets bonus points for using the phrase “maximize founder mode” in a press release sentence that also includes “mainstream economy.” Really, it's an elite-level vibe straddle.