The pandemic has transformed how we work, and how we hire. Companies that would have been reluctant to hire employees more than a few hours away are now opening their doors to workers from around the world, and in doing so creating new opportunities for companies such as Brex.
Providing businesses with financial solutions including cards and spend management, Brex is specifically targeting rapidly expanding companies, including through its recently launched platform Brex Empower. However, the company has witnessed a transformation in its potential customers as a result of the pandemic, and so has this month pivoted to extend its support to globally reaching customers.
“Our mission with Brex is to reimagine financial systems, so every growing company can realize its full potential,” says Henrique Dubugras, Founder and Co-CEO of Brex.
“The world changed a lot in the last two and a half years since Covid. Since the pandemic, a huge number of startups have started hiring globally as well as more mature companies that were only in the US before.”
Brex Empower: Meeting the needs of a global workforce
Brex’s services have long been designed to serve the myriad needs of growing businesses, including through cards, business accounts and expense tracking. However it has also added bill pay services, as well as the recently launched platform Brex Empower.
Launched earlier in April as a spend management platform, it is designed to enable companies to scale quickly while maintaining financial discipline, and is intended to be the foundational service on which all future Brex products will be added.
However, this month the company expanded the service to support customers hiring abroad. This represents a significant shift in mindset for Brex to a more global approach, reflecting the increasingly international focus of employers.
“What we’re announcing is the first step toward that journey of Brex being a global platform,” says Dubugras.
“The first step for us is helping serve the US-based companies that are hiring abroad, but hopefully over time we’ll do a lot more than that.”
Adding cross-border capabilities
This global expansion of Brex Empower sees the company upgrade its services to meet the needs of global businesses, with Dubugras highlighting key areas where the company added or extended capabilities to solve for cross-border challenges.
The first enables customers to provide their employees with same-day reimbursements for expenses, a service that is available in over 100 countries. Brex has also extended the capabilities of its cards to enable them to be used locally in countries around the world, adding support for a number of local payment technologies in the process.
Customers using those cards have multicurrency support, but this also extends to the entire platform, enabling companies to tailor stipends, policies and similar to different markets.
“You can create, for example, $25 a day meal policy in the US and maybe in Europe, you want a €10 a day meal policy,” he says. “You can have different policies and different everything in different currencies, as well as matching receipts and getting receipts in all these different currencies as well.”
In addition, the company has extended support to 24/7, reflecting the wide variety of timezones its customers are now operating in, and has already added a number of users to the platform. As part of the announcement for Brex Empower, the company announced global payroll provider Deel as one of its first customers as part of a partnership that will see it integrate the company’s services into the platform.
“We wanted to pick someone that was very global and extremely committed to hiring everywhere, like they are, to be the marquee customer for this product,” says Dubugras.
These additions provide a significant global extension to Brex’s services, but the company also has more planned.
“This launch is just the first step; there’s a lot more we want to do going forward,” he says.
“We have the ability to locally collect. We want to build, over the next few months, so you can pay from bank accounts from around the world, like locally issued cards, you can cap cards that are issued in-country and a few other things like VAT support that we’re building to support even better globally.”
Ultimately Dubugras sees its new global focus as a foundational part of its future growth.
“We have this massive commitment in Brex that we’re going to be global-first and we’re going to think about every customer from a global perspective. This is just the first step of a long journey.”
Having started as a company solving for the complex mix of problems in US domestic payments, Brex had planned to add international support eventually, but saw it more as being driven by its increasing exposure to larger enterprise customers.
However, the changing business landscape towards a far more global approach at all company sizes has been a powerful driver of this reposition.
“This was only a mid-market enterprise level conversation, but now every single startup is hiring everywhere,” says Dubugras.
“That is a massive difference in our core market and where we started, so in order to support our core customer, that becomes a need.”
Notably, the company also now sees a significant future customer base among non-US companies, who can only be accessed by the addition of these international capabilities.
“The amount of startups that are being created and being successful now from other countries is increasing a lot. It’s been trending in that direction for a long time, but I think it’s been accelerated,” he says.
“Now there’s massive companies getting out of everywhere. From Nubank in Brazil, Revolut in Europe, a lot in India, China, etc.
“Eventually serving these global startups or these global companies is a massive opportunity, but that definitely comes at the cost of doing less things in the US only.”
Brex’s business model
So far, Brex’s primary source of revenue has been interchange fees on card spend, and although it does not charge transaction fees and does not intend to for cross-border purchases or for global customers, it is seeing a notable increase in spend outside the US.
“We’re seeing a lot of cross-border spend and not only cross-border spend, but cross-border spend and a lot of different places,” says Dubugras.
“Since Covid, the amount of countries that Brex has been used in and how often it’s used in those countries has increased dramatically.”
However, it now plans to expand its revenue model to charge for software, with the announcement of pricing set for summer.
The company also provides credit lines to US customers, and is planning to allow non-US subsidiaries of US companies have access to the same, on, says Dubugras, as “case-by-case” basis. But regardless of where a company is based, Brex’s approach to underwriting credit is relatively unusual.
“Our underwriting model has been the same for a while, which is taking into consideration the venture capital industry and how much cash companies have raised over time, instead of just the traditional EBITDA base underwriting that the incumbents did,” he explains. “We’re still doing that and it’s not hard to do that globally.”
Looking forward, Dubugras is confident that the trend is towards increasingly globalized workforces, making Brex’s global refocus a strong strategic move.
“We think [US startup accelerator] Y Combinator is a leading indicator of what the startup and tech world will look like in five years and almost half of the companies in YC are hiring people outside of their main country. That’s a super strong indicator of what the tech ecosystem’s going to look like in a few years.”