Brex is a unique fintech cum financial services firm that the customers of Silicon Valley Bank trusted when they realized their bank was failing and they wanted to save their money:
When Silicon Valley Bank in the US was collapsing, it was a neobank, Brex, that really made a killing. As panic spread across the US about the failure and customers initiated unprecedented withdrawals, Brex saw billions in deposits pouring in and thousands of businesses applying for customer accounts. In about a week as the collapse became a reality, Brex added 4000 new customers and secured $2 billion in deposits.
The neobank’s co-founder and co-CEO Henrique Dubugras said later, “Every five minutes we had a call scheduled.” He helped the fallen bank and its customers by arranging emergency bridge credit lines for the customers. Brex also moved $200 million of its corporate funds to Silicon Valley Bridge Bank, the entity that came into being post the collapse and operated by the FDIC.
FINANCIAL MANAGEMENT PLATFORM
Brex, now a 6-year-old startup worth $12.3 billion, and which describes itself as an all-in-one financial management platform for enterprise companies and venture backed startups, offers spend management solutions, including cash accounts that can be used to pay bills and fund payroll. It started with servicing tech startups, and this still remains a significant portion of its customer base. It also has a very unique credit card offering.
The fintech since its founding in 2017 has transformed into a service organization offering business checking accounts, credit cards, employee expense management and reporting for scaling businesses. Its proponents say if one’s business falls under the qualification criteria, then it offers the most mature suite of banking features. It charges zero accounts fees, does not have any minimum balance requirement, unlimited transactions are possible, there are free ACH and check payments and free outgoing domestic and international wires.
CRDEIT CARD FOR CORPORATES
It offers no debit cards but there is a unique corporate credit card. Designed for well-funded startups, the no-annual-fee Brex 30 Card requires no personal guarantee and has dynamic credit limits that move in line with the company’s cash flow. There are high rewards for those who are Brex exclusive and big discounts on certain products and services and instant virtual card access. A customer can get 10-20x higher limits than traditional business credit cards while earning rewards and cash back on everything one spends, like 7x on rideshare and 2x on recurring software.
To get approved for a Brex card with monthly payments, businesses need a linked bank balance of at least $50,000. The card is issued on the Mastercard network and aims to provide a solution with credit limits based on a company’s cash flow, without any personal liability requirement. Eligibility is based on a business’ spending patterns and sales volume. There is no requirement of any collateral or security deposits, but it does require automatic payments that are debited from the customer company’s bank account.
There are 2 types of Brex cards – a credit card that is paid off daily and a credit card that is paid off monthly. Both are charge cards, which require cardholders to pay off their balance in full whenever payments are due. There is no facility to revolve the balance. There is no annual fee for both the cards. There is no limit on the number of Brex Cards that are available to a business – if a company wants a credit card for each of its 5000 employees, it can have so.
BREX BANK – BUT NOT A BANK
Brex had in 2021 got mandates from the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions to set up a wholly owned subsidiary called Brex Bank. In April 2022, it launched Brex Empower, a financial software platform to help people comply with their employers’ expense policies. In the same year, it exited the SMB market, shifting focus to serving enterprise customers. Brex keeps its funds received from its customers in multiple FDIC-insured accounts, or a money market fund that must hold 99.5% of its money in securities fully backed by the US government. The business accounts minimize a company’s exposure to any one bank, or even to Brex itself. All the funds are always available for withdrawal and Brex never uses customer deposits for lending purposes.
INVESTMENT OPPORTUNITIES
Brex has a unit, called Brex Treasury, which is an SEC-registered broker-dealer and member of FINRA and SIPC that provides Brex Cash, a program that allows customers to elect to sweep uninvested cash balances into certain money market mutual funds or FDIC-insured bank accounts at program banks. Brex Cash acts like a business bank account, with no fees, minimum balances or limits to worry about. The money invested in a Brex Cash account is protected for up to $500,000 by the Securities Investor Protection Corporation (SIPC).
