Less than 1 year after launching its corporate card for startups, Brex eyes $2B valuation

Brex, the fintech business that’s taken the startup world by storm with its sought after corporate card tailored for entrepreneurs, is raising millions in Series D funding less than a year after it launched, TechCrunch has learned.

Bloomberg reports Brex is raising at a $2 billion valuation, though sources tell TechCrunch the company is still in negotiations with both new and existing investors. In response to a request for comment, Brex co-founder and chief executive officer Henrique Dubugras told TechCrunch they have no news to announce at this time.

Kleiner Perkins is leading the round via former general partner Mood Rowghani, who left the storied venture capital fund last year to form Bond alongside Mary Meeker and Noah Knauf. As we’ve previously reported, the Bond crew is still in the process of deploying capital from Kleiner’s billion-dollar Digital Growth Fund III, the pool of capital they were responsible for before leaving the firm.

Bond, which recently closed on $1.25 billion for its debut effort and made its first investment, is not participating in the round for Brex, sources confirm to TechCrunch. Bond declined to comment.

Brex, a graduate of Y Combinator’s winter 2017 cohort, has raised $182 million in VC funding, reaching a valuation of $1.1 billion in October 2018 three months after launching its corporate card for startups and less than a year after completing YC’s accelerator program.

Most recently, Brex attracted a $125 million Series C investment led by Greenoaks Capital, DST Global and IVP. The startup is also backed by PayPal founders Peter Thiel and Max Levchin, and VC firms such as Ribbit Capital, Oneway Ventures and Mindset Ventures, according to PitchBook.

The company’s pace of growth is unheard of, even in Silicon Valley where inflated valuations and outsized rounds are the norm. Why? Brex has tapped into a market dominated by legacy players in dire need of technological innovation and, of course, startup founders always need access to credit. That, coupled with the fact that it’s capitalized on YC’s network of hundreds of startup founders — i.e. Brex customers — has accelerated its path to a multi-billion-dollar price tag.

Brex doesn’t require any kind of personal guarantee or security deposit from its customers, allowing founders near-instant access to credit. More importantly, it gives entrepreneurs a credit limit that’s as much as 10 times higher than what they would receive elsewhere.

Investors may also be enticed by the fact the company doesn’t use third-party legacy technology, boasting a software platform that is built from scratch. On top of that, Brex simplifies a lot of the frustrating parts of the corporate expense process by providing companies with a consolidated look at their spending.

“We have a very similar effect of what Stripe had in the beginning, but much faster because Silicon Valley companies are very good at spending money but making money is harder,” Dubugras told me late last year.

Stripe, for context, was founded in 2010. Not until 2014 did the company raise its unicorn round, landing a valuation of $1.75 billion with an $80 million financing. Today, Stripe has raised a total of roughly $1 billion at a valuation north of $20 billion.

Dubugras and Brex co-founder Pedro Franceschi, 23-year-old entrepreneurs, relocated from Brazil to Stanford in the fall of 2016 to attend the university. They dropped out upon getting accepted into YC, which they applied to with a big dreams for a virtual reality startup called Beyond. Beyond quickly became Brex, a name in which Dubugras recently told TechCrunch was chosen because it was one of few four-letter word domains available.

Brex’s funding history

March 2017: Brex graduates Y Combinator

April 2017: $6.5M Series A | $25M valuation

April 2018: $50M Series B | $220M valuation

October 2018: $125M Series C | $1.1B valuation

May 2019: undisclosed Series D | ~$2B valuation

In April, Brex secured a $100 million debt financing from Barclays Investment Bank. At the time, Dubugras told TechCrunch the business would not seek out venture investment in the near future, though he did comment that the debt capital would allow for a significant premium when Brex did indeed decide to raise capital again.

In 2019, Brex has taken steps several steps toward maturation.Recently, it launched a rewards program for customers and closed its first notable acquisition of a blockchain startup called Elph. Shortly after, Brex released its second product, a credit card made specifically for ecommerce companies.

Its upcoming infusion of capital will likely be used to develop payment services tailored to Fortune 500 business, which Dubugras has said is part of Brex’s long term plan to disrupt the entire financial technology space.