$12bn group seeks expansion in sign of resilience among start-ups launched in a period of ultra-low interest rates
The Brex logo is displayed on a smartphone screen.
Brex, the $12bn corporate card company backed by venture capitalists including Peter Thiel, is expanding into Europe as it looks to leapfrog rival Ramp and build towards an initial public offering.
The eight-year-old company secured a licence last month that allows it to serve European-headquartered businesses, and is planning to roll out its services across the continent and in the UK.
The European expansion will open up a market worth as much as $5bn a year in additional revenue, as Brex closes in on its first ever period of profitability, according to chief executive Pedro Franceschi.
“Business in Europe didn’t really have a good solution before, it was Barclays in some areas, but not really a modern solution,” said Franceschi.
Brex, which offers corporate cards and expense management to companies such as Arm, Wiz and Anthropic, is aiming to take share from massive incumbents such as American Express that dominate the multitrillion-dollar corporate card market.
It is also competing with Ramp, another US start-up founded in 2019 which has raised capital twice in the past three months, setting a new $22.5bn valuation in the process.
The European push signals the resilience of start-ups such as Brex that were born during a period of ultra-low interest rates.
The San Francisco-headquartered group was among the fastest growing financial technology start-ups during a venture capital boom, racing to a valuation of $2.3bn in 2022. But the company lost momentum as rising interest rates led to less start-up funding.
Brex undertook an aggressive turnaround plan over the past two years, which one investor described as “a torturous journey” that involved “repositioning the company, firing a bunch of people, getting people back in the office and shedding the excess from 2020/2021”.
The company’s annualised gross revenue, a forecast of annual revenue from performance over a shorter period, was $700mn in August.
Now, Brex is on the cusp of making more than it spends for the first time, according to Franceschi. “It’s going to happen in the next two quarters, at this point it’s sort of inevitable.”
Brex has been backed by some of Silicon Valley’s most high-profile investors, including Kleiner Perkins, Greenoaks Capital and IVP. Thiel personally invested in the company when it was launched, and has since also backed Ramp via his firm Founders Fund.
Brex was among a crop of fintech companies, along with Klarna, Revolut and Stripe, that shot to prominence and set new records for financial technology company valuations in the run-up to 2022.
The group’s ability to weather a period of market volatility will provide a test case for other start-ups of a similar vintage.
The turnaround has come from three things, said Franceschi — focusing on fewer products, selling them better and changing the company’s culture from the one that had developed in a zero interest rate period.
“Companies which did well in the [zero-interest rate policy] era found life harder when that changed,” said Franceschi. “We took that lesson to heart in 2023. We raised the intensity bar and returned to office, we raised the floor and the ceiling for how people are performing.”
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