Brex targets startup loan market with $ 150 million in new debt service

While several lenders have historically offered lending services to start-ups, Brex is looking to take advantage of the increase in venture capital debt financing with a $ 150 million fund. The newly launched Debt Brex Venture Debt will seek to compete with companies such as Silicon Valley Bank, American Express and Bank of America Corp.

Brex, which ranked No.6 on this year’s ranking CNBC 50 disruptor list, provides start-ups with high credit lines and software to manage their finances and lines of credit. While its main product – an insecure, high limit payment card for start-ups – exposes it to losing companies that could go bankrupt en masse, the company manages risk by using real-time data on companies. clients to help make dynamic lending decisions.

Henrique Dubugras, co-CEO and co-founder of Brex, told CNBC’s “TechCheck” Wednesday that this additional loan service with Brex Venture Debt will give business owners the capital they need to grow their businesses.

“If our clients grow up giving them more loans that maximize their property, they grow up and become bigger clients for Brex,” Dubugras said. “This market is ripe for disruption, and we will lead with flexibility, speed and transparency.”

Compared to traditional banking services, Dubugras said Brex loan services would not have “questionable terms” and would actually help grow their clients’ businesses.

“A lot of lenders will say, ‘Hey, I’m going to lend you $ 4 million, but you have to keep $ 4 million in your bank account,’ and that doesn’t extend the trail or help in any way,” Dubugras said. .

Although Brex will have to balance risk management with its more flexible lending services.

“If you’re not ready to expand the lead for your customers, the loan is actually zero interest,” Dubugras said. “The way we manage risk is simply to select the best companies from Brex clients.”

In April, Brex raised $ 425 million for a valuation of over $ 7.4 billion, more than double its previous private value of $ 3 billion. In addition, the company claims to have increased the total number of customers by 80% this year alone.