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 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?
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.