Launching Brex Venture Debt
Aug 25, 2021, 3 min read
Aug 25, 2021
3 min read
We have an exciting update to share: our latest product, Brex Venture Debt, is launching today. We’ve been working on it for the better part of a year, and are thrilled to finally bring it to our customers.
Like many other venture-backed companies, Brex raised capital through venture debt early on in our journey. We saw firsthand how impactful venture debt can be, extending our cash runway with minimal dilution and allowing us to defer fundraising for the ideal time. At the same time, we learned how cumbersome it usually is to close a venture debt deal. The process is complicated, spans several months, and takes attention away from a company’s core focus.
Over the last year, we’ve met with over 100 founders who share many of these frustrations with existing financing solutions. Founders don’t think these solutions solve for their needs. They want capital that can be drawn at any point, that scales with their business, and that’s available early in the company life cycle. They want capital that minimizes dilution. And, founders don’t want the distraction of chasing multiple term sheets and going through endless rounds of diligence.
We designed Brex Venture Debt to solve exactly these pain points and put founders first:
- Flexibility: Most venture debt is a one-time offering until maturity. From our conversations, we learned the importance of repeatable, on-demand debt lines that grow with your business. This allows companies to extend their cash runway as their business grows. Our solution offers this.
- Minimizing dilution: By talking to founders, we discovered that they want venture debt earlier in their company’s life cycle, when the capital raising process is most dilutive to the company. We believe the excessive dilution is unnecessary, especially for companies generating repeatable and growing revenue. At the time of IPO, company founders own on average <15% of their company (across all founders!) and some own <5%. Taking venture debt enables these figures to be meaningfully higher.
- Fast closing: Founders want a fast and easy process. Instead of flooding term sheets with technical legal jargon, hidden fees and inflexible deal structures, our term sheets are delivered quickly, excludes hidden fees and are light on covenants.
The virtual events platform Welcome was one of our earliest venture debt customers. Welcome used the product to complement the company’s Series A round, led by Kleiner Perkins.
Roberto Ortiz, co-founder and CEO of Welcome highlighted how our offering differs from existing solutions. “Brex has helped power our growth and their offering is much more tailored to the needs of growing companies than what existed previously in the market. Having on-demand capital is giving us the flexibility to choose when and how we raise money, and how we spend our time. In addition, having this capital allows us to take bets — it’s a big advantage, and a game-changer.”
We are thrilled to start serving many more customers like Welcome. The launch of Brex Venture Debt is a significant step towards providing founders with the best financial tools to scale their business. If you’re interested in learning more, please click here.
Onwards and Upwards!
Henrique & Ben
This memo was co-authored by Henrique Dubugras, Brex’s cofounder and co-CEO, and Benjamin Wu, CEO of Brex Asset Management.
Eligibility disclaimer: This offering is available to early stage venture-backed technology companies with a proven product/market fit, recurring revenue base (e.g., B2B SaaS software), and scalable business model. Companies typically have $500k or more of ARR with strong growth. None of the information contained herein represents an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied.