Brex Breaks

Plus, AI and the bank fraud arms race.

Number of the Week: $2.25 trillion (explanation below)

Brex Breaks

If fintech ever wanted a poster child for a dramatic rise and fall, it need look no further than Brex, a startup founded in 2017, primarily as a way to help companies handle payments and expenses (high-limit charge cards were an early feature). The cofounders were two impossibly young Brazilian men, who dropped out of Stanford to launch the company. They attracted top-quality investors, including Tiger Global Management.

In theory, the COVID lockdown could have damaged Brex’s business because corporate travel and entertainment shrank. But that didn’t seem to stop investors from plowing money into Brex. In 2021, a round valued the company at $12 billion. There was talk that year of Brex deepening its lending relationship by creating a bank licensed in Utah, although that effort seems to have been sidelined.

As recently as this past summer, Brex appeared to be riding high, thanks to a windfall from the collapse of Silicon Valley Bank (SVB). The Wall Street Journal reported that when the run on SVB began, Brex’s cash management unit took in $3 billion in a single day, most from fleeing SVB customers who had no previous relationship with Brex.

Still, Brex could not escape the broader economic trends.