Brex secures $57 million in funding

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US-based corporate credit card provider for startups, Brex, has secured a $57 million funding round from investors including Y Combinator Continuity Fund, Peter Thiel, Max Levchin, Yuri Milner, VC Ribbit Capital, and former Visa CEO, Carl Pascarella. Additionally, Anu Hariharan, partner at Y Combinator Continuity Fund, and Meyer Malka, managing partner at Ribbit Capital, will join Brex’s board of directors.

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Brex was founded last year and aims to provide startups with a quick and effective credit card option — it has already attracted 1,000 customers and is now launching globally. While it’s initially targeting startups, it expects that those companies will grow with the help of its credit card option over time, and the company is already starting to pick up larger clients.

Brex might offer small businesses a better credit option than traditional players.Brex doesn’t require a personal guarantee or deposit when applying for a card, and it can give businesses a credit limit up to 10 times higher than other credit card providers, according to Henrique Dubugras, founder of Brex. That’s because the credit limit available to a company through Brex is a percentage of its available cash balance, and thus depends on the capital of a startup rather than its credit history.

Businesses therefore don’t have to go through time-consuming credit approval processes, as Brex simply connects with their bank accounts to adjust the credit card spending limit. Brex claims that customers can receive a virtual credit card in 5 minutes, compared with conventional banks that often take weeks to issue an approval.

This credit card offering will likely be appealing to small businesses. Small businesses are largely underserved by the financial market, so this time-effective solution will probably see high uptake, especially from those businesses struggling to get approved by conventional banks.

Moreover, 56% of small- and medium-sized businesses choose to use fintechs to save time and money, indicating that receiving a virtual credit card in 5 minuteswill be an attractive feature. However, it remains to be seen how successful Brex will be at evaluating credit limits for customers to ensure that credit is issued appropriately and defaults are avoided.

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