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Capital One To Buy Fintech Startup Brex At Less Than Half Its Peak Valuation In $5.15B Deal
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Banking giant Capital One announced on Thursday that it is acquiring fintech startup Brex for $5.15 billion in a cash and stock deal.
The news was big in the fintech world with Brex claiming the pairing would represent “the largest bank-fintech deal in history.” (Visa had planned to buy Plaid in 2020 for $5.3 billion until that deal fell apart a year later due to regulatory concerns.)
In a joint statement, Capital One founder, chairman and CEO Richard Fairbank said it’s always been a goal of the bank “to build a payments company at the frontier of the technology revolution.”
“Acquiring Brex accelerates this journey, especially in the business payments marketplace,” he said. “Brex invented the integrated combination of corporate credit cards, spend management software and banking together in a single platform. They have taken the rarest of journeys for a fintech, building a vertically integrated platform from the bottom of the tech stack to the top.”
While $5 billion is no small sum, it is less than half the $12.3 billion that San Francisco-based Brex was valued at in October 2021. In total, the company has raised $1.7 billion in equity and debt since its 2017 inception — with about $1.2 billion of that being venture funding.
Early investors such as Ribbit Capital, which led Brex’s $7 million Series A in 2017, are likely quite pleased with the outcome. Investors who wrote checks at its later stages are likely less so.
Other early backers include Y Combinator, Max Levchin, Peter Thiel and SV Angel 1 .
The company has 1,100 employees, according to a Brex spokesperson who also told Crunchbase News that its business is growing 40% year over year and is profitable. Customers include Anthropic, Robinhood, DoorDash, Toast, Zoom and Intel, among others.
Close friends Franceschi and Henrique Dubugras, who co-founded Brex, started working together when they founded another company, Brazilian payment processing startup Pagar.me, in 2012 at the wee age of 16. That company ended up getting acquired by Stone Pagamentos for “tens of millions of dollars” — before the two had even gone to college.
A change of plans
Brex began its life as a buzzy startup that served mostly other startups. But in June 2022 — three months after announcing it would make a big push into software and enterprise — Brex confirmed that it was apparently abandoning a segment it started to serve: small to medium-sized businesses.
The abrupt news didn’t sit well with many of the SMBs it served.
Over time, Brex began to seemingly fall behind its largest rival, Ramp, when it came to fundraising and revenue generation. Ramp as of last November was valued at $32 billion, having raised a total of $2.3 billion in equity.
By joining Capital One, Brex says it will accelerate Capital One’s presence in corporate cards and spend management, complementing its existing leadership in SMB banking.
Capital One’s purchase of Brex is slated to close midyear.
Related reading:
- Visa And Plaid Pull Plug On $5.3B Merger Amid Increased Antitrust Scrutiny
- Fintech Ramp Now Valued At $32B After $300M Raise Led By Lightspeed
Illustration: Dom Guzman
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Capital One To Buy Fintech Startup Brex At Less Than Half Its Peak Valuation In $5.15B Deal
Share:
Banking giant Capital One announced on Thursday that it is acquiring fintech startup Brex for $5.15 billion in a cash and stock deal.
The news was big in the fintech world with Brex claiming the pairing would represent “the largest bank-fintech deal in history.” (Visa had planned to buy Plaid in 2020 for $5.3 billion until that deal fell apart a year later due to regulatory concerns.)
In a joint statement, Capital One founder, chairman and CEO Richard Fairbank said it’s always been a goal of the bank “to build a payments company at the frontier of the technology revolution.”
“Acquiring Brex accelerates this journey, especially in the business payments marketplace,” he said. “Brex invented the integrated combination of corporate credit cards, spend management software and banking together in a single platform. They have taken the rarest of journeys for a fintech, building a vertically integrated platform from the bottom of the tech stack to the top.”
While $5 billion is no small sum, it is less than half the $12.3 billion that San Francisco-based Brex was valued at in October 2021. In total, the company has raised $1.7 billion in equity and debt since its 2017 inception — with about $1.2 billion of that being venture funding.
Early investors such as Ribbit Capital, which led Brex’s $7 million Series A in 2017, are likely quite pleased with the outcome. Investors who wrote checks at its later stages are likely less so.
Other early backers include Y Combinator, Max Levchin, Peter Thiel and SV Angel 1 .
The company has 1,100 employees, according to a Brex spokesperson who also told Crunchbase News that its business is growing 40% year over year and is profitable. Customers include Anthropic, Robinhood, DoorDash, Toast, Zoom and Intel, among others.
Close friends Franceschi and Henrique Dubugras, who co-founded Brex, started working together when they founded another company, Brazilian payment processing startup Pagar.me, in 2012 at the wee age of 16. That company ended up getting acquired by Stone Pagamentos for “tens of millions of dollars” — before the two had even gone to college.
A change of plans
Brex began its life as a buzzy startup that served mostly other startups. But in June 2022 — three months after announcing it would make a big push into software and enterprise — Brex confirmed that it was apparently abandoning a segment it started to serve: small to medium-sized businesses.
The abrupt news didn’t sit well with many of the SMBs it served.
Over time, Brex began to seemingly fall behind its largest rival, Ramp, when it came to fundraising and revenue generation. Ramp as of last November was valued at $32 billion, having raised a total of $2.3 billion in equity.
By joining Capital One, Brex says it will accelerate Capital One’s presence in corporate cards and spend management, complementing its existing leadership in SMB banking.
Capital One’s purchase of Brex is slated to close midyear.
Related reading:
- Visa And Plaid Pull Plug On $5.3B Merger Amid Increased Antitrust Scrutiny
- Fintech Ramp Now Valued At $32B After $300M Raise Led By Lightspeed
Illustration: Dom Guzman
In This News
Share:
In This News
Share:
Read More
The Week’s 10 Biggest Funding Rounds: A Big Week For AI And Drone Delivery