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  • Frank Tian

Brex Ending SMB Relationship

Grow Out of The Relationship

Brex, a 5-year-old fintech specializing in corporate credit cards for startups, is parting ways with the key SMB segment.

The company announced that it will end the relationships with 10,000 SMBs unless the businesses have been professionally funded in some way. Its new focus - is software and enterprise solutions.

This is an example that a business grows out of the relationship with a key customer segment, as they are entering a new phase of the journey.

👉 Interest Rate Hike Effect

The rate rises fast - the Fed hikes 150 bps in 3 months already, with more to come.

As a result, the business prospect is gloomy. The R(recession) word is back.

This puts tremendous pressure on fintech as we are on the other side of the pandemic - their high valuations were supported by low rates and high growth.

Investors now have to prioritize profitability to preserve values - otherwise, they will not be able to find the next buyers who are willing to pay higher prices.

👉 Values Rebalanced

A sustainable business needs to produce values for multiple stakeholders:

  • Customers

  • Employees

  • Investors

Facing potential recession, business operators make various moves to de-risk and shift values away from customers and employees to investors.

For more detailed coverage here is the CNBC report

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