Brex: the $400M/year anti-Amex

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Brex San Francisco, California

Brex is a corporate card and expense management startup.

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#b2b

#fintech

#expense-management

Jan-Erik Asplund

Published Apr 21st, 2023

TL;DR: Brex and Ramp are the PayPal and X.com of corporate spend—competitive with each other, but more importantly chasing the bigger prize of disrupting American Express and its $1.5 trillion of network volume and $50B in revenue with software. For more, check out our company report on Brex (dataset) and our interview with Andrew Hoag, CEO of Teampay.

Historically, startup founders have struggled opening bank accounts and getting credit cards—particularly without giving a personal guarantee. Ecosystem providers like Silicon Valley Bank (SVB) underwrote startups based on closed networks and brand name investors, while incumbents like American Express (NYSE: AXP) and Chase (NYSE: JPM) considered startups, aka loss making companies with zero revenue but large deposits, as an unattractive subsegment of commercial banking. (link)
In 2018, Brex launched a credit card for startups and hit 1,000 customers in 5 months underwriting cash in the bank, not historical financials, with 10x the credit limit of American Express and no personal guarantee. With Brex, newly-formed startups could get approved for a corporate card within seconds by connecting their bank accounts via Plaid ($250M revenue in 2021) vs. filling out paper forms and waiting for weeks for approval from an American Express. (link)
Unlike Amex, which charged $300-600/year for a corporate card, Brex gave away cards for free and offered startup-centric perks like AWS credits—monetizing transaction volume on the backend via a roughly 2.7% interchange rate. The proposition of free money, combined with the near-zero switching cost of adding or swapping out an existing card, gave Brex incredible acquisition velocity to land into startups and then expand as their volume grew. (link)
Today, Sacra estimates that Brex is at $400M revenue, growing 67% year-over-year and doing $17.5B in annualized transaction volume, last valued at $12.3B or a 31x multiple to current revenue with 50,000+ customers (~40% of U.S. startups). Compare to American Express at $52B in revenue, growing 24% year-over-year and doing $1.55 trillion in total network volume, with 3.2M businesses in the U.S, valued at $121B or 2.4x current revenue, and Ramp—at $152M in revenue growing 347% year-over-year, valued at $8.1B or 53x revenue. (link)