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Brex: Reinterpreting Financial Systems


The digital world is with us - almost everything we do today can be done online.

Every business shifted to the online space in the last couple of years. Restaurants have started accepting and delivering through online apps, shops have opened e-stores of their brands, etc.

But what happened with the financial part of their stories? Many businesses, especially start-ups, can’t get access to a full scope of financial services if their credit score is not acceptable. This is what Henrique Dubugras and Pedro Franceschi saw as a flaw in the system and decided to change.

Hence, enter Brex!

This company is an all-in-one financial system that wants to revolutionize the services from this sector offered to businesses, starting with credit cards for start-ups. Henrique and Pedro's idea was to help businesses launch, scale up and reach their full potential.

Let’s see more of their enticing story that brought Brex into the world!

How It All Began

Henrique Dubugras was born and raised in Sao Paulo, Brazil. Growing up, Henrique’s family had a shared computer which he used frequently. However, he never let his computer habits get in the way of his education. In fact, apart from being talented at complex problem solving, he excelled all throughout school.

Pedro Franceschi was born in Rio de Janeiro, Brazil. Like Henrique, Pedro was fascinated by computers, which were a relatively new phenomenon at the time. He used to tinker with different programs and software, eventually leading him to learn coding and programming.

The two didn’t meet until December 2012, when they were in their senior year of high school. They started discussing the nuances of coding tools, but Twitter’s character limit obstructed the flow of their conversation. So the teens decided to have a Skype call where they would have a more direct conversation.

Soon afterward, they realized how much they had in common and became close friends. That fateful meet-up would soon prove to change their lives for the best.

When Things Started Changing

Even before graduating high school, Pedro worked as a software engineer for various companies, including M4U, Brainjuice, and Sync Mobile. He had to quickly learn on his feet and balance work with high school obligations. However, this was a valuable experience, which paid off in future projects.

Henrique had a similar experience juggling work and school. He was an iOS developer for Views and a tech load for Ingresse. His job at Ingresse was challenging since he had to manage an entire team of programmers.

After meeting and shortly before graduating high school, the pair started working on their first project together. They founded and led, a solution that enabled online payments for Brazilian merchants.

The pair were enthusiastic about working together and gave the project their full effort. Their hard work paid off because the company was awarded startup of the year by Microsoft a year after. They were also featured on Forbes 30 Under 30 for Brazil in 2015.

In 2016, Henrique and Pedro decided to sell to Stone, a larger Brazil-based payment fintech. They wanted to use this money to pay for college, where they would study computer science.

So in September that year, the duo moved to California and enrolled at Stanford University. They had a successful start and quickly adapted to their new way of life.

However, mid-way through their freshman year, Pedro and Henrique realized they wanted to do more. Thus, in early 2017 they dropped out of college and started working on their second project together. And that’s how Brex was born.

A Small Fish in a Big Pond

Originally, Pedro and Henrique wanted to build bank accounts for US startups to use. However, this was too unattainable because the two Brazilians didn’t have other businesses’ trust to get their money. So they settled on offering corporate credit cards instead.

Despite their ambitions and prior success, entering the American market proved to be more difficult than they initially thought. There was rife competition from different companies, so they had to find a way to differentiate themselves. Their solution was to offer an entire package of other tools that complemented the corporate credit card.

The power-duo first started by offering credit cards, i.e., corporate cards, to small businesses and start-ups. These cards allowed users to build business credit, simultaneously earning rewards based on the type of card they’d acquire. In all cases, the selling point was the fact that there were no fees that followed the daily or monthly card subscriptions.

In 2019, Brex finally fulfilled its goal of offering business accounts to its customers by partnering with LendingClub and JPMorgan Chase. These accounts have multiple benefits, such as no required minimum deposit, free transfers, no account fees, unlimited cards, and much more.

Finally, the company recently launched Brex Empower. This is the financial platform that ties all of the other tools together. It can auto-generate receipts, visually present expense policies, and give other benefits to employees. But the most significant advantage of Empower is its ability to connect to other systems companies might use, such as ERPs and HRIS.

Financing Fenomenal Fintech

After launching in early 2017, Brex immediately started raising funds to grow the company. The Seed Round happened in March 2017, where it raised a modest $120,000 from Y Combinator as the sole investor. However, only a month later, Brex had a Series A round, raising over $7 million from 14 different investors.

Since the initial funding rounds, the company has had numerous other successful ones. The latest one was a Series D round, announced on October 22, 2021. In total, the company raised over $1.5 billion over the course of 11 funding rounds.

Brex is currently financed by 53 investors, of which 9 are lead investors. Y Combinator is one of the most consistent investors, supporting the company since the Seed Round. Some of the latest investors to join are Durable Capital Partners, DST Global, and Greenoaks Capital during the Series D round in October 2021.

Another way Brex has grown is by acquiring other organizations. In April 2022, Brex acquired Pry Financials, a financial planning platform, for $90 million. Brex has obtained 5 other companies since launching.

On May 27, 2021, Brex invested in the Seed Round of Kodo. Kodo is a fintech startup based in India specializing in B2B payments for small businesses. The investment was valued at ₹635 million, or $8.11 million.

Henrique Dubugras has ruled out an IPO in the near future during an Axios Pro Insights event. The company is not against going public in general but is waiting for the right time.

Brex Today and Tomorrow

What started as a small idea today grew to have over 1,000 employees, with a current headquarters in Draper, Utah, the US. Since 2019, Brex has been a unicorn on the market. In 2020, it expanded its reach to traditional businesses aside from their tech-oriented start-ups. However, this is something that will change from now on.

Namely, for the future, Brex has decided to stop serving these conventional small businesses. The co-founders' reasoning was that trying to serve everyone simultaneously would only stretch out Brex even further, thus not giving the right attention to anyone.

On the plus side, Brex has recently added a “Spend Management” section to their services. It is still in its early stage, telling users that this is just the first step of many towards improvement!