Brex redundancies 2022: FinTech start-up cuts 11% staff after exiting SME market
Financial technology startup Brex has laid off 11% of its workforce — or about 136 employees — CEO Padro Franceschi revealed in a blog.
The redundancies reinforce how quickly the venture capital and start-up market has developed over the past year. In fact, Brex raised $300 million for a valuation of $12.3 billion in October 2021. The financial services and software company supports “startups, scaled companies and e-commerce brands.”
Describing Brex’s evolving business focus, TechCrunch wrote in January 2022:
“Brex started life with a focus on offering credit cards mainly aimed at start-ups and SMEs. It has gradually evolved its model with the aim of acting as a one-stop financial shop for these companies. April last year [2021], Brex said it had combined credit cards, business cash accounts and new spending management and bill payment software “together into a single dashboard” as part of a service called Brex Premium that costs $49 per month. Today, the company is focused on the corporate card product it has built since its inception, banking products and expense management products. Or put more simply, it aims to serve as a “financial operating system” for its customers.
Brex also offers a partner program for affiliates, accounting firms, brokers and lenders and VC investors.
Still, signs of trouble came in mid-2022. In fact, Brex alienated thousands of SMB customers when they decided to leave the small business market in June 2022.
Related: See all tech industry layoffs listed here.
Ahead of redundancies: Brex is leaving the SME customer market
Fast forward to October 2022, and CEO Padro Franceschi blamed the layoffs on two factors:
“…increased focus on our strategy, and adaptation to the new macro environment. Late last year we decided to sharpen our focus and serve fewer customers very well. Today’s change is a continuation of this. We’ve been laser-focused on serving early-stage startups and scaled companies this year, and we’re very grateful for the momentum we’ve seen at Empower since we launched in April.”
Empower is a software platform “designed to enable a culture of trust and financial discipline at scale.” Empower is now the foundation of all Brex products, starting with an entirely new cost management product, the company said in April 2022.
Tech industry layoffs: Speculation in recession as IPO windows remain closed
The Brex layoffs continue to reflect job cuts across some Silicon Valley startups as well as established giants. In fact, layoff news from Oracle, SAP and Intel also surfaced this week.
The job cuts come amid continued speculation about a potential recession. A recession is usually defined as two quarters of negative economic growth along with other factors such as widespread job losses, CNBC notes.
Amid this backdrop, the initial public offering window remains generally closed on Wall Street, and venture capital firms are pulling back on high-value deals. As a result, some companies seek debt financing as a bridge to a potential IPO and/or future VC funding rounds. For example, security firms Arctic Wolf and Huntress both raised debt financing in mid-2022.
Meanwhile, we don’t know Brex’s monthly burn rate, or whether the company will need to raise more cash.
