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by trhway
1469 days ago
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> Brex has a bunch of multipliers ranging from 7x to 1x points. sounds like Brex has been losing money on unit economics while making it up on volume, and now with VC money tightening ... Wrt. small business vs. startup - i'd guess that any company older than 3-5 years which hasn't become big enough (in spending or revenue) and not showing fast growth can be considered a small business :) |
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Startups usually have tons of cash in the bank to underwrite against, which made them actually very safe to lend to, unintuitively enough (that underwriting model was Brex's original innovation, remember?).
Whereas small businesses usually don't, but still need a reasonable credit limit to spend with, so they end up having to underwrite using traditional data sources like credit scores and whatnot, and they probably haven't been able to develop a sophisticated enough model quickly enough to curb losses, and the recession certainly isn't going to make things any easier.
So, anticipating further accelerated credit losses down the line, this is them throwing in the towel on that whole experiment.