Brex, which is a Silicon Valley lender to startups, has dropped “tens of thousands” of small business customers as it intends to focus on bigger venture-backed clients, CNBC wrote, quoting co-founder Henrique Dubugras.
The company has been letting customers know about the changes, saying they’ll have until August 15 this year to take the funds from their online accounts and find new providers.
It shows how the change is coming among startups as there’s been an abrupt shift in the market conditions, with companies that used to look at growth now focused more on a different kind of discipline.
The CNBC report noted that there has been a shift as the high-flying publicly-traded fintech shares began to fall off late last year, which has continued now.
Dubugras has said the company decided last December, with their startup customers becoming “increasingly demanding.” There were some dropping valuations for public companies, with that soon coming into the private world too.
That led to less valuations for companies that hadn’t had IPOs yet. Firms had to instead shift to focus on profitability.
Some of the bigger Brex customers have requested solutions to control expenses and hire cheaper international workers, according to Dubugras.
As that was going on, traditional brick-and-mortar small businesses like retailers and restaurants had flooded the support lines, meaning there was worse service for the startups the company valued more, CNBC wrote.
“We got to a situation where we realized that if we didn’t choose one, we would do a poor job for both,” Dubugras said. “So we decided to focus on our core customer that are the start-ups that are growing.”
PYMNTS wrote that Brex has recently bought Pry Financials, a financial modeling platform for the startup market, for $90 million.
Pry offers Excel-like apps to simplify things like financial forecasting, budgeting, hiring and modeling cash flow. Dubugras said Brex had heard about how Pry had “helped simplify the management of their finances.”