Brex acquired by Capital One for $5.5 billion is a) an utter failure or b) a clear success?
B, folks. The answer is B, congratulations are in order.
So why are so many people lamenting this as a misfire?
Because $5.5B is well under the peak valuation of $12.3B in 2021.
Which, look, I get it. But valuations in 2021 were basically absurd for everyone! Obviously if you're the late-stage investors who bought in at that price, you're not throwing a party today. Yes, you got your money back but not a great investment.
(Btw, you know who else took a down round from their 2021-era valuation? Ramp. They then got back on a rocketship path, but even they didn't avoid the frenzy)
𝗠𝘆 𝘁𝗵𝗼𝘂𝗴𝗵𝘁𝘀:
Common stock will definitely see good returns, as the total amount raised was way below the exit value. Meaning the deal cleared the liquidation preference for investors.
Founders built something awesome and clearly made out well.
Employees could have been a mixed bag (with early employees doing great and those that joined later no so much) BUT as James Reggio (Brex CTO) notes in the attached tweet, the company re-cap'd employees at a more realistic valuation a couple years back. So looks like all employees benefited here which is a major win. Respect to the founders for looking out!
Deal is half cash, half stock and Capital One stock is doing just fine lately.
Brex completely changed finance for startups when they launched and now that entire category is booming. That's a real legacy.
Respect to Brex for a hell of a run and for minting employee millionaires on the way out.
Worth celebrating!
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