Brex again made the stunning but perhaps realistic decision to work with another one -off competitor. This time Zip, CEOs of both companies, told TechCrunch exclusively.
In April 2022, Fintech Brex announced that it was “a big boost” to both the business and the software.
The news was remarkable, as Brex was initially a starting start on the newly established businesses. It provides corporate cards that were mainly addressed to newly established businesses and MMB. Brex gradually evolved its model with the aim of serving as a “financial operating system” for companies.
When the company announced that it was branching in the software, its aim was to differentiate its revenue flows. Thus, instead of earning mainly money from the exchange fees, it also seeks to generate recurring revenue from subscriptions to its software.
But over the years, it seems that Brex has realized that there are some aspects of business customer service that they may not have the potential to do the way they want. And, according to head of businessmen Art Levy, the majority of his revenue today still comes from exchange fees (although the software is steadily increasing, he said).
So, in what could be considered as a surprise, Brex announced last fall that she worked with Navan to offer ”Brexpay for Navan“By combining its corporate card with Navan’s travel management in a business -targeted product, when the Navan (formerly called Tripactions) were expanded from the mere offering of travel services after Covid Pandemic Hight in overall cost management, it was increasingly competitive with Brex.
And on Tuesday, Brex is now announcing another partnership that aims to boost its offer to the business. Works with Zip, a five -year commission start set $ 190 million in valuation of $ 2.2 billion last October to offer ”Brex for zipper“The two companies shared with TechCrunch exclusively.
Co -founder and CEO of Brex Pedro Franceschi and CEO and co -founder Rujul Zaparde told TechCrunch that one reason that the partnership made sense was that the two companies serve over 30,000 companies together, with some coating. For example, companies that Brex and Zip Count as customers include anthropogenic, Etoro, Betterup, Carta, Coinbase, Gong, Zapier, Wiz and Neuralink, among others. Both are largely focused on the development of the customer base of their business and we hope that the new combined offer will boost their respective positions in this department.
In the first quarter, Brex saw business revenue increased by 70%and net revenue for the department is over 130%, according to Franceschi. Meanwhile, the Zip had the largest quarter in a record in a total of zipper, with a 155% increase in the business strategic department, Zaparde told TechCrunch. In addition to those mentioned above, other companies that count zippers as customers include Openai, Discover, Snowflake, Reddit and Sephora.
In the case of Brex, the start realized that what Zip had built for supplies was more than it could offer when trying to sell to the business.
“When you are starting, but you don’t really have a complicated supply flow, then usually a corporate card works, but when you go to a more sophisticated business, something like zip really comes to life in a different way, because you have a complex supply process,” Franceschi told TechCrunch.
Interestingly, the zippers who “never lost a business customer”.
Brex’s humility is also remarkable, as the start herself admitted that he was trying to do too quickly and thus hitting some road bumps in his development. In a TechCrunch Committee in 2022, co -founder Henrique Dubugras acknowledged that the starting starting to focus more strategically on the customer starting base.
But maybe Brex really gets the last word. Decisions on collaboration with Zip and Navan also mean that Brex spends less money on building products. Therefore, movements could also be detected to reduce cash, which is also Brex working. In January 2024, Brex announced that it had reduced 282 employees or almost 20% of its staff in restructuring. The move came after reports that the company was burning $ 17 million in cash each month in the fourth quarter of 2023 and was trying to maintain the corridor.
Efforts to slow down the combustion of cash seem to perform, according to Franceschi. In the first quarter, Cash Burn For Brex decreased about 90% on a yearly basis, he said.
Burning baby
Since its founding in 2017, Brex has brought more than $ 1.5 billion to both primary and secondary transactions. It was estimated at over $ 12.3 billion in its climax in 2022. Since February, the start expects that annual net revenue will reach $ 500 million this year. In April, the company saw more than 154% increase in revenue. Brex is not yet profitable, though Franceschi expects it to be by the end of the year.
The transition to the public is still on the march map. Finally.
“We want to be a public company, but we want to do publicly when we are ready to do it,” Franceschi told TechCrunch. “There is a lot in this, but taking the rule structure is vital. While we are closer to the IPO front, there are other estimates, such as the financial profile and market conditions.”
In the meantime, it seems to lean on this strategy of cooperation with other companies. In the case of working with Navan on Travel, Franceschi said Brex acknowledged that it could meet the needs of its smaller customers, but that it could benefit from helping to serve the base of businesses.
“We continued to hear the same thing from customers: their disconnected systems slow down,” he told TechCrunch.
The phrase for such relationships could be described as “cooperation”, or the combination of cooperation and competition. In Fintech, in particular, many companies realize that it is more reasonable to cooperate or invest in other newly established companies that have created something that they are interested in offering or improving. For example, the starting of Carta’s stock management recently wrote a check in the increase of Simpleclosure’s $ 15 million after abandoning its own plans to build a similar product.
And for Brex and Zip, the decision to finally work together to hear their customers.
“It was just a very natural collaboration,” Zaparde told TechCrunch. “And really, the customer base took it out of us.”
Franceschi agrees.
“We asked ourselves,” how can we build a deep integration of products where one plus one equals five, and that is what we bring to the market now. ”
