Brex, created by frustrated Y-Combinator alums, offers credit cards to early startups

After struggling to find credit in Y-Combinator, two alums founded a startup called Brex to offer readily accessible credit cards for startups that don’t have cash flow yet.

June 20, 2018

Brex, a fintech startup that makes credit cards for startups, raised $50m in their Series B. 

The company started out by offering hard-to-find credit to early startups (mostly Y-Combinator companies) — but has grown to serve more than 1k clients.

Credit was stuck in the Cretaceous period

Credit cards are usually issued to businesses based on revenue. So, when Henrique Dubugras and Pedro Franceschi got into Y-Combinator’s accelerator program, they were shocked to discover that — despite their $120k+ in funding — a line of credit was hard to come by. 

And, the Brazilian entrepreneurs learned that small business credit is pegged to personal credit — making funding difficult for founders without established, American credit to lock down financing.

So Brex created a credit card that doesn’t require cash flow, a FICO score, or a deposit — just an account with at least $100k. Oh, that’s all?

It’s them vs. the big guns (AKA banks)

Other companies offer loans (Lendio) or aggregate credit options (Nav), but Brex is one of few to offer actual credit cards — other than banks.

“Our biggest competitors today are traditional banks,” CEO Dubrugas told The Hustle in an interview. “No one has our niche of focusing on early-stage startups and technology.”

To compete with big banks, Brex set aside some of its $50m (in case its startup partners crash and burn) — but it’s optimistic that its low barrier to entry will help its platform reach $1.5B in spending in 2019.

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