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Charge card startup Brex aims for decacorn success

By now, Brex, the young startup that is trying to reinvent corporate credit and charge cards, is well-known in Silicon Valley. The tender age of the companys co-founders, Henrique Dubugras and Pedro Franceschi, the big-name backers, the $125 million Series C announced last month, the aggressive billboard advertising in San Francisco, and the companys torrid growth have all contributed to the swirl of attention. But, of course, it was the valuation at the last round which placed Brex into the fintech unicorn club that tops the list.
Recently, Brex offered up a new reason for chatter as it unveiled its new, generous rewards program that was purpose-built for the kind of entrepreneurs who aspire to match Brexs success. But lost in the buzz are the specifics of how Dubugras and Franceschi have approached the arcane challenge of building a payments start-up.
To better understand that, chief executive Dubugras opened up about his and Fraceshis previous start-up, Pagar.me, which was acquired by newly public Brazilian credit card processor StoneCo, the challenges of scaling quickly, how a Brex card compares to traditional corporate card products and the companys plan to navigate the ups and downs of business cycles. Finally, Dubugras spoken candidly but confidently about the considerable pressures facing the company now that everyone is watching.
Gregg Schoenberg: Its good to connect again, Henrique. As you know, Brex has gotten a lot of press for having gone from from zero to fabulous in a short time. But for those who have missed the Brex story, what problems are you solving for start-ups?
Henrique Dubugras: One is a case where the founder cant get a credit card because they dont have a FICO score or cant provide a personal guarantee. Another case is when a founder can get a card, but doesnt want to provide a personal guarantee.
GS: Which is understandable.
HD: Yes, I think its not a very smart idea. Brex can solve that because we can issue them a card now without a personal guarantee. Finally, theres the founder who doesnt care about the personal guarantee, but there are other things related to the experience of having a credit card that could be much better, and weve solved for that.
GS: The first two speak to a differentiated underwriting approach, but that third issue seems especially challenging.
HD: Yes. On the underwriting side, we take into consideration your cash balances, and the VCs that invested in you. Its a Silicon Valley way of underwriting that allows you to go from zero to a working card in like five minutes. But in terms of the third use case, yes, we had all of these people telling us, Hey, its impossible to rebuild credit card systems from scratch. No one has done it in the last 20 years.

Pagar.me Success
GS: Thats why I want to discuss Pagar.me, because I think it provides insight as to how you were able to disprove doubters.
HD: Well, we had built a payments company before, so we kind of knew how to do it and just decided to rebuild everything from scratch. You saw the Stone IPO, right?
GS: I did, and buried deep in the footnotes of the S-1, it points out how much it spent on the remaining amount of Pagar.me for in 2016. So while you and Pedro built something that was a success, it wasnt like you were able to buy an island with your proceeds.
HD: Theres another part that wasnt part of the IPO, but no, we still cant buy an island.
GS: And this narrative that you and Pedro were able to come here from Brazil and in short order wave in all of this amazing funding because you had a huge exit is not accurate. Instead, I see two guys who navigated a very bureaucratic financial system
HD: Yes.


We had this experience that was pretty unique compared to US payment companies or ones from any other place.
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