Brex Lays Off 136 Employees Amid Restructuring
A Shift in Focus
In a move that highlights the challenges faced by even the most well-established fintech companies, corporate spend management startup Brex has laid off 136 people, or approximately 11% of its staff. This decision is part of a broader restructuring effort aimed at sharpening the company’s focus on the enterprise segment.
From SMBs to Enterprises
It’s been a tumultuous year for Brex, which initially announced in April that it was leaning into the enterprise segment. This new direction led to the company deciding in June that it would no longer work with small businesses or non-professionally funded startups. While this decision caused an uproar within the startup community, it appears to have had a direct impact on certain internal roles.
Restructuring and Layoffs
Brex has stated that it initially tried to repurpose as many roles as possible before deciding to let some people go. This move is evidence that even decacorns are not immune to the challenging macro environment of 2022, which includes a tough fundraising climate.
In an effort to soften the blow for those affected, Brex will provide eight weeks of pay for all impacted employees, with an additional two weeks for each complete year of service. For those with less than one year at the company, the startup is waiving the equity cliff. Additionally, it is offering to extend the exercise period on options to seven years.
Support for Affected Employees
The company has also announced that impacted workers will have access to current healthcare benefits through the end of the month and then Brex will cover the costs for three months after that. This move highlights the company’s commitment to supporting its employees during this challenging time.
Strong Signals on Empower
Despite these changes, Brex is seeing strong signals from its new enterprise-focused software offering, Empower. Since its launch in April, the platform has experienced a 5x month-over-month growth in monthly active users ‘on an increasingly large base.’ It has also passed $3 billion in annualized processing volume in less than three months of going live.
Growth Amid Challenges
Meanwhile, Brex cash deposits have seen a 100% year-over-year increase, with rising interest rates actually increasing revenue in its deposits business. The company declined to share hard revenue figures but noted that growth remains strong even in this environment.
Betting on the Enterprise Space
Brex has taken a significant risk by betting on the enterprise space, and it will be interesting to see how this decision plays out. The fintech landscape is rapidly evolving, with companies like Brex needing to adapt quickly to changing market conditions.
Update
This story was updated post-publication to clarify that Swiecicki will be joining Rippling as CFO.
Why Did Brex Decide to Ditch SMBs?
The decision by Brex to focus on the enterprise segment and no longer work with small businesses or non-professionally funded startups has sparked a lot of debate. While some see this move as a strategic shift necessary for growth, others view it as a departure from the company’s core mission.
Commentary
Mary Ann Azevedo, Sr. Reporter at TechCrunch, notes that Brex’s decision highlights the challenges faced by even the most well-established fintech companies. The move underscores the need for companies to adapt quickly to changing market conditions and focus on high-growth areas like the enterprise segment.
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