By Oliver Smith on Monday 3 June 2019
The lender's business model is built on California's core values.
Originally published in The AltFi Weekly Newsletter, for more like this sign-up now.
By comparison, Europe’s most valuable digital bank, N26, just reached a $2.7bn valuation after 6 years and has captured well over 2m customers spread right across the continent.
So what gives?
The crux of Brex is its fintech credit card business model that has garnered such hype among Silicon Valley investorati—including star investor Kleiner Perkins if reports are to be believed.
Brex alleges that entrepreneurs who take out traditional corporate credit cards are left “exposed” through a “hidden trap” of personal guarantees which link their personal assets and credit score to business borrowing. Brex requires no such personal guarantee.
“Technology startups fail at greater rates than the general population of US service-based (professional) small businesses.”
Right now none of this matters. Brex is growing quickly by leveraging a credit-hungry audience of startups across Silicon Valley and, more importantly, these startups are in-turn enjoying a flood of investment flowing into the sector.
What happens when that flood is reduced to a trickle, both for the Valley and for unique lending models like Brex, waits to be seen.