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Brex to stop serving “traditional” small businesses


US-based fintech Brex has announced that it will stop serving traditional small businesses, citing different needs of the market compared to its core client base.

Brex will no longer serve small businesses

Affected businesses have until 15 August 2022 to transfer their account balances and connect to an alternative bank account or platform, the company says on its website.

Customers are being suggested BlueVine as an alternative option.

“The needs of this market are very different from our core customer base of technology start-ups and larger companies,” Brex says.

“Small business customers deserve a partner who is entirely focused on their needs, and we don’t feel we can adequately serve them moving forward.”

Brex started off in 2018 as a corporate card for start-ups, with clients including the likes of DoorDash, Airtable, Scale and Flexport. In 2020, it decided to onboard traditional brick-and-mortar businesses alongside tech start-ups.

Explaining the rationale behind the decision, Pedro Franceschi, founder of Brex, says that over time, the team realised their start-up customers were growing “very fast” and needed Brex to scale with them.

“However, we still had tens of thousands of small businesses with very different needs from fast-growing companies,” he adds. “And by spreading ourselves too thin, we couldn’t serve either small businesses or start-ups well.”

Franceschi says that small businesses could not get the products they needed, such as working capital solutions, while Brex had to degrade its service to start-ups.

“In late 2021, we decided to go back to our core, and shift our resources to make sure start-ups could scale with Brex,” he says.

As part of its decision, the company says it can “no longer serve small businesses that are not pre-seed or have not received venture funding”.

Brex is now focusing on helping organisations scale with its new offering – Empower – launched in April.

It describes Empower as “a new software platform designed to enable a culture of trust and financial discipline at scale”. Going forward, it will serve as the foundation for all Brex products, the company says, starting with a completely new spend management product.

The aforementioned DoorDash has been named as an early taker, with Empower supporting its global, distributed team of 9,000+ employees.

Brex is valued at over $12 billion, having raised an additional $300 million in a Series D-2 round in January this year. It has also recently spent $90 million on Pry Financials, a software platform that provides budgeting, forecasting and bookkeeping tools.

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  • Source: https://www.fintechfutures.com/2022/06/brex-to-stop-serving-traditional-small-businesses/

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