Brex partners with former competitor Zip, with an eye on reducing cash burn to get to an IPO

Brex again made a sudden decision, but perhaps realistic, in partnership with another competitor. This time Zip, the chiefs of executives at both companies told Techcrunch exclusively.

In April 2022, Fintech Brex announced that it would make a “big boost” in both the institution and programs.

The news was noticeable, given that Brex was originally a startup that focused on startups. Introduced cards that aim mainly to startups and SMBS. Brex gradually developed its model with the aim of working as a “financial operating system” for companies.

When the company announced that it was branching into the software, its goal was to diversify its revenue flows. So, instead of mainly earning money from exchange fees, she was also seeking to achieve repeated revenues from subscriptions to their programs.

But over the years, it seems that Brex has realized that there are some aspects of service customer service that may not have the capabilities to do the way you want. According to the chief entrepreneur Art Levy, the majority of its revenues still come from the exchange fees (although the software grows steadily, he said).

So, in what might be a surprising step, Brex announced last fall that it was cooperating with Navan to present “Brexpay for Navan”, which combines the company’s card with the NAVAN travel management in a product targeting institutions. Once NAVAN (formerly called Tripancets) expanded the mere provision of travel services after he struck the roaming epidemic in comprehensive expenditures management, was increasingly competitive with Brex. So the news that the two were joining some eyebrows.

On Tuesday, Brex now declares another partnership aimed at enhancing its presentation of the institution. It is a partnership with Zip, a five -year -old emerging company that raised $ 190 million with a rating of $ 2.2 billion last October, to provide “Brex for Zip”, the two companies participated with TECHRUNCH exclusively. The new offer is merges the default cards for Brex directly on the Zip platform with the aim of granting institutions “the ability to simplify the workflow of purchases and pay the workflow, prevent unauthorized spending before it occurs and simplifying global operations with one card program.”

The co -founder, CEO of Brex Pedro Franceschi, co -founder and co -founder Rujul Zaparde Techcrunch, told one of the reasons that made the partnership logical is that the two companies serve more than 300,000 companies, with some interference. For example, companies that consider Brex and Zip include Anthropor, Etoro, Betterup, Carta, Coinbase, Gong, Zapier, Wiz, Neurolink, among other things. Both are largely focused on developing their customer base in the institution and hope that the new joint presentation will strengthen their positions in this part.

In the first quarter, Brex witnessed that institutions revenue for it by 70 %, and net revenue for the sector by more than 130 %, according to Franchi. Meanwhile, Zip was generally the largest record for ZIP, with 155 % growth in the strategic institutions sector. Besides those mentioned above, other companies that consider customers Openai, Discover, Snowflake, Reddit and Sephora.

In the case of Brex, the startup realized that what ZIP built for purchases was beyond what it could provide when trying to sell to the institution.

“When you are emerging, but you don’t really have a complex workflow, then the company’s card usually works. But when you go to a more sophisticated institution, something like a postal code really comes in a different way, because you have a complex purchase,” said Franceschi Techcrunch.

Interestingly, Zip tells that she “has never lost a single institution agent.”

It is worth noting that Brex modesty is also considered that the young man has confessed to trying to do a lot very quickly, thus hitting some bumps on the roads in their growth. On the TECHRUNCH disruption committee in 2022, co -founder Henrik Duppses acknowledged that the startup needed to focus more strategically on providing its customer base.

But Brex may get the last word. Decisions related to partnership with ZIP and NAVAN also mean that Brex spends less money on product construction. As such, movements can also be tracked to reduce critical burning, something that Brex was also working on. In January 2024, Brex announced that it had reduced 282 employees, or nearly 20 % of its employees, in restructuring. The move came after reports that the company burned 17 million dollars in cash every month during the fourth quarter of 2023 and that it was trying to maintain the runway.

It seems that the efforts to slow down a cash burning are fruitful, according to Franchy. He said that in the first quarter, Barkas’s money was burned by about 90 % on an annual basis.

Burning the child burning

Since the beginning of 2017, Brex has brought more than $ 1.5 billion in primary and secondary transactions. Its value was more than $ 12.3 billion at its peak in 2022. As of February, the startup expected the net annual revenue to reach $ 500 million this year. In April, the company witnessed more than 154 % in the revenue achieved. Brex is not yet profitable, although Franchishi expects it by the end of the year.

Going to the audience is still on the road map as well. recently.

“We want to be a public company, but we want to publish in public when we are ready to do so,” Franceshey told Techcrunch. “There is a lot of this, but getting the governance structure is very important. While we are closer to the public subscription interface, there are other considerations such as financial financial files and market conditions.”

Meanwhile, it appears to be inclined to this strategy represented in partnership with other companies. If she collaborated with Navan on Travel, Franceschi said that Brex realized that she might meet the needs of her smaller customers but may benefit from assistance in serving the base of her institutions.

“We continued to hear the same thing from customers: the separate systems slowed them.”

The phrase of these types of relationships can be described as “cooperation”, or a mixture of cooperation and competition. In Fintech in particular, many companies realize that it makes sense to participate with other startups who have built something that they are interested in providing or improving. For example, Carta Startup Management Carta recently wrote a check in increasing $ 15 million after abandoning its own plans to build a similar product.

For both Brex and Zip, the partner’s decision ultimately wanders to listen to its customers.

“It was just a very natural partnership,” Zabardi told Techcrunch. In fact, the customer base brought it out of us. “

Franchishi agrees.

“We have asked ourselves, how we can build a deep integration of the product as it equals one plus five, and this is what we offer to the market now.”