Weekly Roundup: Brexit Breakdown

Happy Friday, DVC! In the world of high fashion, cheap t-shirt titan Gildan is reportedly fighting off a coup after hedge fund Browning West allegedly illegally bought new shares in an effort to overthrow the board and bring back ousted CEO Glenn Chamandy.

Both factions within the company claim wrongdoing on the other side, but honestly I don‘t know who to believe. To be safe, I’m putting away all my “High School X-Country Bi-Annual Pancake Breakfast Fundraiser” Gildan tees in protest until I have a better idea of what’s going on.

Welcome to DVC!

Welcome to the 10 new members who’ve signed up for DVC since last week! We’re happy to have you 👋 

You’re invited! QAI Startup Valuation Masterclass:

Valuation is probably one of the hardest things to get right (for both founders and investors).

So, we’re excited to announce that next Thursday, Feb 1 at 12pm EST, we’re conducting a free 1-hour masterclass on the QAI Method of Startup Valuation!

In the session we’ll provide a framework for evaluating and scoring startup deals, as well as discuss updates on the SEC’s current “Accredited Investor” regulation.

Hope to see you there!

Startup News & Weekly Poll:

Given that until 4 days ago I thought multi-billion dollar expense management startup Brex was the exact same company as multi-billion dollar expense management startup Ramp, you’d be forgiven for not noticing that Brex just cut 20% of its staff amid a wave of tech layoffs. 

Here’s the overview 👇️ 

What Happened Then:

Founded in 2017, Brex started by providing corporate credit cards to startups and small to medium-sized businesses (SMB’s). They generated revenue mainly through interchange fees, similar to Amex, Visa, or Mastercard.

Over time, Brex made a “big push into software” - presumably to prove it wasn’t just a sleeker yet less profitable copy of (you guessed it) Amex, Visa, or Mastercard.

The company’s growth into bank accounts, spend management, and bill pay software helped it land corporate customers like DoorDash, $1.2 billion in total funding, and a $12.3 billion valuation in 2022.

What’s Happening Now:

On Tuesday, The Information reported that Brex was burning $17 million per month in Q4 2023 and only had enough cash to survive until March 2026.

Despite contesting the figures, Brex immediately announced layoffs for 282 employees (20% of its staff) and a radical restructuring of company leadership.

With the decision, Brex’s CEO cited a new commitment to “long-term thinking and ownership over short-term gains” - which is great to hear if you’re an investor but terrible to hear if you’re a Brex employee hired since the last rounds of 17% layoffs in 2020 and 11% layoffs in 2022.

According to Brex, the company now has roughly 1,200 employees and 4 years of runway.

Our take:

There are two main themes sparking our interest here.

First, the fact that a game of “Spot The Difference” between Brex’s and Ramp’s websites could entertain a kindergarten class for 6 hours shows how competitive the “expense management startup” space is.

That’s not to mention the sea of competitors like Navan, Airbase, Rippling, and countless others catering to the tech industry, or the traditional giants like (again…) Amex, Visa, or Mastercard. It will be interesting to see if Brex can turn over a new leaf and provide liquidity to investors in the next ~4 years of supposed runway.

Second, it’s confusing to see the massive layoffs in tech juxtaposed with record high consumer sentiment in the broader market. I’m not a trained economist, and my neighbor who does Tarot card readings is off preparing for Mardi Gras in the Florida Keys, so sadly I don’t know for sure what will happen next. It seems like a good time for a poll…

Choose an answer below and see how you stack up next week!

Last Week's Results:

Last week we gave an overview of the SEC’s controversial “Accredited Investor Rule” and asked for your thoughts… Unsurprisingly, 100% of you said you think it’s “an inconsistent standard that keeps most investors on the sidelines”…

We agree 💪 and our mission is to lead the change to a logical, knowledge-based standard. If you’re interested in learning more, be sure to register for our QAI Startup Valuation Masterclass (details above).

Vote for New Deals:

Help select DVC's future deals! Please view the options, upvote your favorites, and suggest your own!

New companies suggested this week:

• Bee 

DVC Deal Review Updates: