Brex’s announcement last week that it would stop serving small-to-medium-sized businesses shocked — and upset — many in its suddenness and delivery.
The fintech decacorn, which started its life as a provider of cards to startups and SMBs, began notifying customers last week that they would be cut off from Brex’s services as of August 15. Earlier this year, Brex had declared a move toward serving enterprise customers and “a big push” into software so from that perspective, the news wasn’t entirely shocking.
Still, many people were confused as to who would be affected, and CEO and co-founder Henrique Dubugras told TechCrunch on June 17 that it would impact SMBs and companies that had not received “professional funding” such as venture capital, for example. Some customers who are venture-backed received notice they would be affected but were later reinstated.
The news caused somewhat of an uproar in the startup community, and today, Pedro Franceschi, founder and co-CEO, addressed the stumble in a blog post titled simply “About last week’s announcement.”
In the post, Franceschi expressed regret over the “poor job explaining this decision, which eroded some of the valuable trust” Brex had built over the years.
He added: “We didn’t clearly communicate who qualifies as a Brex customer moving forward, which created confusion about which companies Brex would still serve.”
And later, he said:
Last week’s announcement was an incredibly disappointing moment for Brex. I signed off on the email that went out, which lacked the transparency our customers deserved. As someone whose dad was a small business owner, the way we communicated this decision weighed heavily on me.
Franceschi went on to clarify who exactly would be impacted, noting the following criteria that a company needed to meet in order to be kept on as a Brex customer:
- Received an equity investment of any amount (accelerator, angel, VC or web3 token).
- More than $1 million a year in revenue.
- More than 50 employees.
- More than $500,000 in cash.
- Tech startups who are on a path to meeting the criteria above and are referred by an existing customer or partner.
Is the missive too late to at least partially offset the hit to Brex’s reputation? Guess we’ll see.