Capital One to acquire Brex for $5.15B

All of these SaaS and Fintech startups from ZIRP were so overvalued.

They refused my business because I didn't have SV VC money

Chase got it instead, but they are losing it next month because of their shenanigans and greed

Wish crypto hadn't been co-opted by the same people and worse

That is a 50% discount, which isn't great for those who got into the latest round.

Seems like Capital One is very excited on the deal and announced it earlier while Brex hid the announcement and made it hard to find. (It's on the Brex [0] journal directory, but you cannot see it featured on its front page)

What (really) happened?

[0] https://www.brex.com/journal

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I feel like one of their primary investors wanted out. It was probably not the opportune time considering the cost of money right now.

Economy’s maybe at risk… see housing starts esp.

For many?

I assume if you put in 100 mn at a 12 bn valuation in the last round, you're either getting 100 back at 1x pref or you're screwing over the common even more?

Considering the 12bn round was back in 21, I'd expect most of the employee base to be taking a haircut on the value of their options.

No. The last two investment tranches will get back their money, based on 1X liquidation preference. Employees who joined in the last 5 years if they got options are fucked. If they have RSUs then they will take a fraction of their equity.

It sounds like investors got out okay, but employees got fucked big time. It's a terrible exit and Brex waited too long until their growth stalled.

If Ramp is getting all the business, is there any reason to think they wouldn't command a much higher valuation?

Brex killed a ton of their customer relationships to "refocus" on larger biz. That created a lot of negative sentiment for the brand.

> All Ramp did was spend more on ads and marketing

That's distribution. It matters.

Ramp has a much more synonymous name, better recognition, and less bad reputation.

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Different businesses. Stripe main business is a payment processor. Brex provides credit.

Stripe has for years helped non-EU companies to do tax fraud in the EU, and in a just world their management would be charged.

Every time a customer in the EU pays with Stripe, they exactly know if they are a private customer or not and in which country that customer is located in. Stripe also knows who the counterparty is ("their merchant").

Yet Stripe systematically enabled their merchants to avoid paying appropriate VAT for sales to private customers in the EU. The merchants would send you a "receipt" and then go dark, no proper invoice provided and no appropriate VAT payments to the EU made.

Their merchants could write fantasy names on the invoices, Stripe would not check or correct anything. They simply ignored the whole Mini-One-Stop-Shop in terms of VAT.

That's the "benefit" of using Stripe, they had very happy merchants who didn't need to pay taxes when selling digital products to EU customers.

I had to light a very big fire under their ass for them to provide proper invoices. I have zero indication they systematically remediated the tax fraud situation and actually paid the EU the VAT that Stripe merchants owe if you'd look into Stripe's accounting.

Fintech exuberance was a symptom of zirp. Brex enabled more credit to folks who couldn't otherwise get credit without a personal guarantee. Zirp and exuberance is over at this point in the credit super cycle. AI doesn't help those fundamentals. Valuations are trending towards fundamentals (based on interest rates, discounted cash flows, etc).

Capital One is paying a fair price for the customer base and infra imho to add to their business customer portfolio.

Congrats to Brex et el on their incredible journey.

do you know, is that 1x?

Hopefully they had the confidence/insight to negotiate properly. I went through BN$ exit (was employee 19) early in my career and unfortunately, only select people at the top got retirement money. The most frustrating part was the Big Co. execs that came in much later, did literally nothing, and got a massive payday. Lesson learned though...

Now I'm wondering if I should've accepted an interview with them. For a while Brex was spamming me with recruiter emails like no other company had done before it.

If growth rate was really 50% YoY, their investors would not let them sell for $5 billion.