Source Code: Your daily look at what matters in tech.

fintechfintechauthorTomio GeronFintech NewsletterGet access to the Protocol | Fintech newsletter, research, news alerts and events.f6ea366a38
×

Get access to Protocol

Your information will be used in accordance with our Privacy Policy

I’m already a subscriber
Protocol | Fintech
The people, power and politics of fintech, every Tuesday and Friday.
Photo: David Paul Morris/Bloomberg via Getty Images

Brex wants to be your CFO

​Brex co-CEO Henrique Dubugras has big ambitions.

Hello and welcome to Protocol | Fintech! This Tuesday: Brex broadens its reach, ending bias in lending and saying no to Stripe.

(Was this email forwarded to you? Sign up here to get it in your inbox every week.)

The Big Story

Brex looks beyond corporate cards

Brex took the startup world by storm with corporate cards that didn't depend on the founder's personal credit. With a fresh new funding round, it's going after a much bigger goal: helping companies manage all their spending.

  • Brex, which just raised $425 million at a $7.4 billion valuation, was first known for its corporate cards for startups, which included popular rewards. It later launched Brex Cash, its business cash-management account. Now it's launching spend management and bill pay as part of a $49 a month subscription offering. "It allows businesses to control all their spend and pay their bills in a super easy way on top of Brex," said co-CEO Henrique Dubugras.
  • It's part of Brex's vision of "being all-in-one finance that businesses can manage 100% of their finances in one place," he said, instead of the typical approach of using a range of tools such as Chase for cash, Bill.com for bill pay, AmEx for charge cards and Concur for expenses.

Brex is far from alone. Competitor Ramp also recently raised at a $1.6 billion valuation for its corporate cards and spend management. Others like Divvy, Teampay and Airbase are also going after business-to-business payments.

  • Brex backer Y Combinator estimates the U.S. market for B2B payments is $25 trillion.
  • Some 64% of that market is still in checks and cash, which provides plenty of room for digital payments to gain share.

The company began life as a VR startup (no, really). But Brex may soon become a bank.

  • In February, Brex applied for a banking license.
  • The goal is to add loans to the mix of Brex products. "Today we can't use deposits to take deposits and lend like banks," Dubugras said. "If we got that charter we could give more credit to small businesses."

Dubugras and co-founder Pedro Franceschi gained their earliest customers by pitching other startup founders on Brex cards. Now the challenge is to woo a much broader set of small and midsized businesses. It can't hurt to have the widest possible range of products in that pursuit.

— Tomio Geron

A MESSAGE FROM FUNDRISE

Relative to a traditional portfolio composed of 60% large-cap stocks and 40% bonds, a portfolio with a 30% allocation to private real estate would have generated a higher return with more annual income and lower volatility over the past 5, 10, 20, and 40 years. Power your portfolio with Fundrise.

Learn more

From Protocol | Fintech

Robinhood has everyone talking about payment for order flow. Here's what you need to know about the practice.

Another Robinhood talking point: The company has filed for a trademark on "HOOD."

Overheard

  • "There's a lot of overlap between gold and Bitcoin. I really spent all of my time in the offseason the past year just hearing about this growing space in crypto. It just seemed like it was getting bigger and bigger." —NFL player Sean Culkin of the Kansas City Chiefs on why he is converting his 2021 salary into Bitcoin.
  • "When we asked Muslims why they bank with Chase versus an Islamic bank that offers sharia-compliant products, their answer was 'We don't have a choice.'" —Khalid Parekh, founder and CEO of challenger bank Fair, on his focus on the Muslim community.
  • "Parents and the current banking options miss the point when they just focus on savings. We need to first prepare kids to be smarter spenders, supported by savings and investing." —Taylor Burton, co-founder of Till Financial, a financial management company geared to kids.

3 Questions With...

Mike de Vere, CEO at Zest AI

What are you most excited about in fintech?

All-In Credit Union, with a mere $2 billion balance sheet serving mostly rural folks in southeastern Alabama, is deploying ML models ahead of some of the top 10 banks. With one new ML model, they go from 10% to 75% auto-decisioning in their auto portfolio [and] from 25 different ways of making loans, one designed at each branch, to a single, consistent approach across the operation. The small firms get the efficiency play.

How can fintech help people get access to credit?

I love what's happening in consumer-permissioned data as a way to increase creditworthiness, stuff like Experian Boost, FICO 9 and apps like Perch Credit. AI lending is another way to break the limits and, let's face it, the disparate impact of traditional credit scoring. AI can take the bias out of models and expand approvals by up to 30% for women and people of color. It's a rare opportunity to do more.

What fintech trend are you most worried about?

Fair lending issues, for sure. We can't have AI in lending if the models perpetuate years of human bias. AI and ML models are only as good as the data scientists who build them. And if they all look and talk and think the same, you get flawed products. That's why it's critical to invest in diverse talent, obviously, but also create and protect space for opposing viewpoints.

Need to Know

  • Airwallex reportedly turned down $1 billion from Stripe. The Australian small-business payments company said no to the takeover offer. Stripe wouldn't comment.
  • Nubank is preparing to go public. The Brazil-based neobank is reportedly preparing for a U.S. stock market listing this year.
  • American Express plans a debit card launch in China. The payments network was cleared to launch the product eight months ago and has been expanding its merchant network in the Asian nation.
  • Uplift signed a "buy now, pay later" deal with Southwest Airlines. The enterprise BNPL company said customers can book flights with flexible payment options.

Deal Flow

  • StashAway raised $25 million. The investment app's series D funding round was led by Sequoia Capital India.
  • Securrency raised $30 million. The blockchain technology company's series B round included investments from WisdomTree Investments, Abu Dhabi Catalyst Partners, State Street and U.S. Bank.
  • Weav raises $4.3 million to be a "Plaid for commerce." The startup has a partnership with Brex to connect with Shopify to offer instant payouts.

Data Point

47%

Jump in share price of MicroVision Monday, one of several meme stocks that rallied that day.

A MESSAGE FROM FUNDRISE

Relative to a traditional portfolio composed of 60% large-cap stocks and 40% bonds, a portfolio with a 30% allocation to private real estate would have generated a higher return with more annual income and lower volatility over the past 5, 10, 20, and 40 years. Power your portfolio with Fundrise.

Learn more

Thanks for reading — see you Friday.

Recent Issues