As Brex exits SMB space, its CEO says it doesn’t include startups… the least-funded ones – Meczyki.Net

Brex’s decision to stop serving SMB customers shocked many in the startup and fintech community.

Meczyki.Net Talks to the CEO and Co-Founder Henrik Dubgrass to learn more about who made the decision, and to gain clarity on who was really affected.

First, Dubgrass emphasized that the company is “committed to startups.” When asked about the criteria that determined which businesses would be affected by its move, he said Brex chose not to work with any business that had any sort of “professional” funding. There was no — either venture capital, angel money or funding from an accelerator. As a result, “thousands” of businesses were told that their accounts would be closed by August 15. Dubgrass acknowledged that the set of criteria may not be “perfect”, but it “must be one.”

He said the businesses affected are mostly brick-and-mortar businesses such as bakeries, restaurants and small design agencies – many of which would argue are being hit hardest by rising inflation and a challenging macro environment.

And while Brex is still serving startups, it is choosing not to serve any boosted startups anymore, if Dubgrass’ words are to be taken literally. If a startup that received funding accidentally received communications from Brex, Dubgrass said they would be reinstated.

What we’re running out of are traditional businesses that weren’t part of the enterprise community. Those are the customers we’ve decided not to serve anymore, but our main customer for Brex is startups. That’s what we got here. We are deeply committed to serving them and the reason we were doing this is because they want a super high touch, white glove experience and they need a partner who can prop them up from there when until they are really small. are really big. And that’s what we’re still committed to doing.

“It’s really hard to do both because of the huge volume,” he said.

Dubugrass said there was also pressure from customers to “go global rapidly” and that led to its decision. He said it wanted to divert resources that were going to SMBs to help its scaling customers.

According to Dubgrass, Brex began its effort to serve SMBs in late 2019 and early 2020. Since then, he said, the smaller startups the company was serving have grown up and had different needs. The company decided to evolve its offering to be able to serve large businesses and enterprise customers.

He said it had become difficult to serve brick and mortar companies that had “entirely different needs” and so the company decided to stop working with those businesses.

“The decision did not come without much thought and a lot of pain. We know this is going to be painful for affected customers and we want to do as much as we can to help out there,” Dubgrass told Meczyki.Net. “But hopefully, we will emerge as an even better offering for our core customers and be able to further our mission.”

Earlier this year Brex announced a major push into enterprise and software, and he said that remains the company’s core strategy going forward.

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