Brex’s announcement last week that it would stop serving small and medium-sized businesses shocked – and upset – many with its suddenness and delivery.
The fintech decacorn, which started life as a card provider for startups and SMEs, began notifying customers last week that they would be cut off from Brex services from August 15. Earlier this year, Brex said it was moving towards business services. and “a big push” in software so from that perspective the news wasn’t entirely shocking.
Still, many people weren’t sure who would be affected, and CEO and co-founder Henrique Dubugras told TechCrunch on June 17 that it would impact SMBs and businesses that hadn’t received “professional funding.” like venture capital, for example. Some venture capital-backed clients were told they would be affected, but were later reinstated.
The news has caused some uproar in the startup community, and today Pedro Franceschi, Founder and Co-CEO, addressed the issue in a blog post simply titled “About Last Week’s Announcement”. .
In the post, Franceschi expressed regret for the “poor job explaining this decision, which eroded some of the precious trust” that Brex had built over the years.
He added: “We have not clearly communicated who qualifies as a Brex customer going forward, which created confusion as to which businesses Brex would continue to serve.”
And later he said:
Last week’s announcement was an incredibly disappointing moment for Brex. I signed the email that was sent, which lacked the transparency our customers deserved. As someone whose father was a small business owner, how we communicated this decision weighed heavily on me.
Franceschi went on to clarify who exactly would be impacted, noting the following criteria a company had to meet to be retained as a Brex customer:
- Received a capital investment of any amount (accelerator, angel, VC, or web3 token).
- Over $1 million in revenue per year.
- More than 50 employees.
- Over $500,000 in cash.
- Tech startups that are on track to meet the above criteria and are referred by an existing client or partner.
Is the missive too late to at least partially offset the damage to Brex’s reputation? I guess we’ll see.