**The Schadenfreude in Silicon Valley: Brex’s $5.15 Billion Sale Raises Eyebrows, but Early Backers Are Smiling**
When the news broke that Capital One is acquiring Brex for a whopping $5.15 billion, the tech world couldn’t help but stare. The purchase price is a far cry from Brex’s peak valuation of $12.3 billion, and it’s no secret that the fintech space has been a graveyard for once-hot startups. But before we all begin sharpening our knives, let’s take a step back and acknowledge the home runs that early investors like Micky Malka, Ribbit Capital, and Y Combinator have just hit.
Malka, a Brex board member from day one, is beaming with pride. As the founder of Ribbit Capital, he led Brex’s $7 million Series A and has seen his investment turn a staggering 700 times over. That’s right, accounting for dilution and all – a testament to the power of venture capital.
Of course, not everyone is celebrating. Brex’s rival, Ramp, has been on a tear, raising $2.3 billion and surging to a $32 billion valuation. Meanwhile, Brex’s founders, Pedro Franceschi and Henrique Dubugras, are still the brains behind the operation. They dropped out of Stanford as freshmen to launch Brex in 2017, and it’s hard not to feel a little sorry for the pair who had to navigate the wild ride that is startup life.
In a weird way, Brex’s missteps might have actually helped the company in the long run. The pair bought the South Park Cafe, only to have COVID-19 shut down the entire city, and then made the questionable decision to shut down tens of thousands of small business accounts in 2022. Ouch.
But it looks like that focus on high-margin enterprise customers and a nascent SaaS business was the right call. Capital One is getting a solid platform, a customer roster that includes TikTok and Robinhood, and a fresh EU license to boot. And those €13 billion in deposits? The icing on the cake.
So while the valuation may be lower than peak, early backers are still laughing all the way to the bank. And who can blame them? When you’ve got a return like that, you can’t help but feel a little smug.
The deal is expected to close in Q2, and it’s hard not to wonder what’s next for the fintech space. One thing’s for sure – the competition just got a whole lot more interesting.
