While several lenders have historically offered lending to startups, Brex is looking to take advantage of an increase in venture debt funding with a $ 150 million fund. The newly launched Brex Venture Debt will aim to compete with the likes of the Bank of Silicon Valley, American Express and Bank of America Corp. to offer early stage venture capital firms an alternative financing option.
Brex that took 6th place this year CNBC Disruptor 50 list, offers startups high credit lines and software to manage their finances and credit lines. While its core product – an unsecured high-limit payment card for startups – provides it to unprofitable companies that can fail en masse, the company manages risk using real-time customer data to help make dynamic lending decisions. …
Enrique Dubugras, co-CEO and co-founder of Brex, told CNBC:TechCheck“On Wednesday that this complementary lending service with Brex Venture Debt will provide business owners with the capital they need to expand their businesses.
“If we make our clients grow by providing them with more loans that increase their ownership interest, they will grow and become bigger clients for Brex,” Dubugras said. “This market is ripe for disruption and we are going to lead flexibility, speed and transparency.”
Compared to traditional banking, Dubugras stated that Brex’s lending services would not have “questionable terms” and would actually help grow their clients’ businesses.
“A lot of lenders will say, ‘Hey, I’ll lend you $ 4 million, but you have to leave $ 4 million in your bank account,’ and that doesn’t really increase the runway and doesn’t help in anything,” Dubugras said. …
Though Brex will have to balance risk management with their more flexible lending services.
“If you are not willing to extend your clients’ runway, there really is no point in a loan,” Dubugras said. “We manage risk by simply choosing the best companies from among Brex clients.”
Brex raised $ 425 million in April. valuation over $ 7.4 billionwhich is more than double the previous private value of $ 3 billion. In addition, the company says it has increased its total customer base by 80% this year alone.
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