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T4 wants to transform market research data with a combination of AI and humans
When T4 co-founder and CEO Maks Khurgin was working at Bain and Company, he ran into a common problem for analysts looking for market data. He spent way too much time searching for it and felt there had to be a better way. He decided to build a centralized market data platform himself, and T4 was born. This week the company competes in the TechCrunch Disrupt SF Startup Battlefield.
What he created with the help of his long-time friend and CTO, Yev Spektor, was built on a couple of key components. The first is an industry classification system, a taxonomy, that organizes markets by industries and sub-industries. Using search and aggregation tools powered by artificial intelligence, it scours the web looking for information sources that match their taxonomy labels.
As they researched the tool, the founders realized that the AI could only get them so far. There were always pieces that it missed. So they built a second part to provide a way for human indexers to fill in those missing parts to offer as comprehensive a list of sources as possible.
“AI alone cannot solve this problem. If we bring people into this and avoid the last mile delivery problem, then you can actually start organizing this information in a much better way than anyone else had ever done,” Khurgin explained.
It seems simple enough, but it’s a problem that well-heeled companies like Bain have been trying to solve for years, and there was a lot of skepticism when Khurgin told his superiors he was leaving to build a product to solve this problem. “I had a partner at Bain and Company actually tell me, “You know, every consulting firm has tried to do something like this — and they failed. Why do you think you can do this?””
He knew that figuring out the nature of the problem and why the other attempts had failed was the key to solving the puzzle. He decided to take the challenge, and on his 30th birthday, he quit his job at Bain and started T4 the next day — without a product yet, mind you.
This was not the first time he had left a high-paying job to try something unconventional. “Last time I left a high paying job, actually after undergrad, I was a commodities derivatives trader for a financial [services company]. I left that to pursue a lifelong dream of being in the Marine Corps,” Khurgin said.
T4 was probably a less risky proposition, but it still took a leap of faith that only a startup founder can understand, who believes in his idea. “I felt the problem first-hand, and the the big kind of realization that I had was that there is actually a finite amount of information out there. Market research is created by humans, and you don’t necessarily have to take a pure AI approach,” he said.
The product searches for all of the related information on a topic, finds all of the data related to a category and places it in an index. Users can search by topic and find all of the free and paid reports related to that search. The product shows which reports are free and which will cost you money, and like Google, you get a title and a brief summary.
The company is just getting started with five main market categories so far, including cloud computing, cybersecurity, networking, data centers and eSports. The founders plan to add additional categories over time, and have a bold goal for the future.
“Our long-term vision is that we become your one-stop shop to find market research in the same way that if you need to buy something, you go to Amazon, or you need financial data, you go on Bloomberg or Thomson. If you need market research, our vision is that T4 is the place that you go,” Khurgin said.
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Osano makes business risk and compliance (somewhat) sexy again
A new startup is clearing the way for other companies to better monitor and manage their risk and compliance with privacy laws.
Osano, an Austin, Texas-based startup, bills itself as a privacy platform startup, which uses a software-as-a-service solution to give businesses real-time visibility into their current privacy and compliance posture. On one hand, that helps startups and enterprises large and small insight into whether or not they’re complying with global or state privacy laws, and manage risk factors associated with their business such as when partner or vendor privacy policies change.
The company launched its privacy platform at Disrupt SF on the Startup Battlefield stage.
Risk and compliance is typically a fusty, boring and frankly unsexy topic. But with ever-changing legal landscapes and constantly moving requirements, it’s hard to keep up. Although Europe’s GDPR has been around for a year, it’s still causing headaches. And stateside, the California Consumer Privacy Act is about to kick in and it is terrifying large companies for fear they can’t comply with it.
Osano mixes tech with its legal chops to help companies, particularly smaller startups without their own legal support, to provide a one-stop shop for businesses to get insight, advice and guidance.
“We believe that any time a company does a better job with transparency and data protection, we think that’s a really good thing for the internet,” the company’s founder Arlo Gilbert told TechCrunch.
Gilbert, along with his co-founder and chief technology officer Scott Hertel, have built their company’s software-as-a-service solution with several components in mind, including maintaining its scorecard of 6,000 vendors and their privacy practices to objectively grade how a company fares, as well as monitoring vendor privacy policies to spot changes as soon as they are made.
One of its standout features is allowing its corporate customers to comply with dozens of privacy laws across the world with a single line of code.
You’ve seen them before: The “consent” popups that ask (or demand) you to allow cookies or you can’t come in. Osano’s consent management lets companies install a dynamic consent management in just five minutes, which delivers the right consent message to the right people in the best language. Using the blockchain, the company says it can record and provide searchable and cryptographically verifiable proof-of-consent in the event of a person’s data access request.
“There are 40 countries with cookie and data privacy laws that require consent,” said Gilbert. “Each of them has nuances about what they consider to be consent: what you have to tell them; what you have to offer them; when you have to do it.”
Osano also has an office in Dublin, Ireland, allowing its corporate customers to say it has a physical representative in the European Union — a requirement for companies that have to comply with GDPR.
And, for corporate customers with questions, they can dial-an-expert from Osano’s outsourced and freelance team of attorneys and privacy experts to help break down complex questions into bitesize answers.
Or as Gilbert calls it, “Uber, but for lawyers.”
The concept seems novel but it’s not restricted to GDPR or California’s upcoming law. The company says it monitors international, federal and state legislatures for new laws and changes to existing privacy legislation to alert customers of upcoming changes and requirements that might affect their business.
In other words, plug in a new law or two and Osano’s customers are as good as covered.
Osano is still in its pre-seed stage. But while the company is focusing on its product, it’s not thinking too much about money.
“We’re planning to kind of go the binary outcome — go big or go home,” said Gilbert, with his eye on the small- to medium-sized enterprise. “It’s greenfield right now. There’s really nobody doing what we’re doing.”
The plan is to take on enough funding to own the market, and then focus on turning a profit. So much so, Gilbert said, that the company is registered as a B Corporation, a more socially conscious and less profit-driven approach of corporate structure, allowing it to generate profits while maintaining its social vision.
The company’s idea is strong; its corporate structure seems mindful. But is it enough of an enticement for fellow startups and small businesses? It’s either dominate the market or bust, and only time will tell.
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Stock trading app Robinhood revamps its newsfeed with The Wall Street Journal and ad-free videos
Robinhood may be best known for its free stock trading, but today it’s rolling out a new version of the newsfeed, adding content from Reuters, Barron’s and market coverage from The Wall Street Journal, with no paywall or additional charge.
In addition, Robinhood is introducing video into the newsfeed, with ad-free videos from CNN Business, Cheddar and (again) Reuters.
The startup, which recently raised $323 million at a $7.6 billion valuation, has been showing more interest in content lately with the acquisition of the financial podcast and newsletter MarketSnacks — and as part of the redesign, the newsletter (now called Snacks) can be read directly in the app.
“A lot of this is not even about making investment decisions,” Robinhood’s vice president of Product Josh Elman told me. “[Some users] check Robinhood very, very often just to consume the news and understand the companies that they’re watching, the ones that they are invested in and continuing to hold.”
He added that just buying and selling stocks is “sort of a utility,” so Robinhood wants to help its users “to feel informed, to be empowered to make their own decisions.”
Before redesigning the newsfeed, Elman said the team did a seven-day study, where they asked subjects to create a diary of “all of their experiences reading and understanding market news.”
Among other things, Elman’s team learned that people “really want to read news from multiple, trusted sources,” which is why Robinhood is partnering with these publications. In addition, they saw that people like watching videos: “Even if it’s in the background, ultimately, people really told us they feel more confident and control in their decisions.”
Along with bringing in new content (which, again, is taken out from behind paywalls and is ad-free), Elman said the Robinhood newsfeed also features “all-new algorithms and a whole new display layer.” Robinhood users can see the new interface for themselves, but I was curious about those algorithms.
“We start with the companies you either own and hold in your portfolio or are watching, what types of sources do you frequently like to watch … and we make sure that we’re bringing you that news as much as possible,” Elman said. “And we have a lot of room to grow from here.”
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India’s Fyle bags $4.5M to expand its expense management platform in the US, other international markets
Fyle, a Bangalore-headquartered startup that operates an expense management platform, has extended its previous financing round to add $4.5 million of new investment as it looks to court more clients in overseas markets.
The additional $4.5 million tranche of investment was led by U.S.-based hedge fund Steadview Capital, the startup said. Tiger Global, Freshworks and Pravega Ventures also participated in the round. The new tranche of investment, dubbed Series A1, means that the three-and-a-half-year-old startup has raised $8.7 million as part of its Series A financing round, and $10.5 million to date.
The SaaS startup offers an expense management platform that makes it easier for employees of a firm to report their business expenses. The eponymous service supports a range of popular email providers, including G Suite and Office 365, and uses a proprietary technology to scan and fetch details from emails, Yash Madhusudhan, co-founder and CEO of Fyle, demonstrated to TechCrunch last week.
A user, for instance, could open a flight ticket email and click on Fyle’s Chrome extension to fetch all details and report the expense in a single click in real-time. As part of today’s announcement, Madhusudhan unveiled an integration with WhatsApp . Users will now be able to take pictures of their tickets and other things and forward it to Fyle, which will quickly scan and report expense filings for them.
These integrations come in handy to users. “Eighty percent to ninety percent of a user’s spending patterns land on their email and messaging clients. And traditionally it has been a pain point for them to get done with their expense filings. So we built a platform that looks at the challenges faced by them. At the same time, our platform understands frauds and works with a company’s compliances and policies to ensure that the filings are legitimate,” he said.
“Every company today could make use of an intelligent expense platform like Fyle. Major giants already subscribe to ERP services that offer similar capabilities as part of their offerings. But as a company or startup grows beyond 50 to 100 people, it becomes tedious to manage expense filings,” he added.
Fyle maintains a web application and a mobile app, and users are free to use them. But the rationale behind introducing integrations with popular services is to make it easier than ever for them to report filings. The startup retains its algorithms each month to improve their scanning abilities. “The idea is to extend expense filing to a service that people already use,” he said.
International expansion
Until late last year, Fyle was serving customers in India. Earlier this year, it began searching for clients outside the nation. “Our philosophy was if we are able to sell in India remotely and get people to use the product without any training, we should be able to replicate this in any part of the world,” he said.
And that bet has worked. Fyle has amassed more than 300 clients, more than 250 of which are from outside of India. Today, the startup says it has customers in 17 nations, including the U.S. and the U.K. Furthermore, Fyle’s revenue has grown by five times in the last five months, said Madhusudhan, without disclosing the exact figures.
To accelerate its momentum, the startup is today also launching an enterprise version of Fyle that will serve the needs of major companies. The enterprise version supports a range of additional security features, such as IP restriction and a single sign-in option.
Fyle will use the new capital to develop more product solutions and integrations and expand its footprint in international markets, Madhusudhan said. The startup, which just recently set up its sales and marketing team, will also expand the headcount, he said.
Moving forward, Madhusudhan said the startup would also explore tie-ups with ERP providers and other ways to extend the reach of Fyle.
In a statement, Ravi Mehta, MD at Steadview Capital, said, “intelligent and automated systems will empower businesses to be more efficient in the coming decade. We are excited to partner with Fyle to transform one of the core business processes of expense management through intelligence and automation.”
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MyMilk Labs launches Mylee, a small sensor that analyzes breast milk at home
Many expectant mothers are told that breastfeeding will come naturally, but it is often a fraught and confusing experience, especially during the first few weeks after birth. Parents often worry about if their babies are getting enough nutrition or if they are producing enough milk. MyMilk Labs wants to give nursing mothers more information with Mylee, a sensor that scans a few drops of breast milk to get information about its composition and connects to a mobile app. The Israel-based company presented today at Disrupt Battlefield as one of two wild card competitors picked from Startup Alley.
The Mylee launched at Disrupt with a pre-order price of $249 (its regular retail price is $349). Based in Israel, MyMilk Labs was founded in 2014 by Ravid Schecter and Sharon Haramati, who met while working on PhDs in neuroimmunology and neurobiology, respectively, at the Weizmann Institute of Science.
During the company’s stage presentation, Schecter said the device is meant to give mothers and lactation consultants objective information about breast milk.
Breast milk changes in the first days and weeks after birth, progressing from colostrum to mature milk. Mylee scans the electrochemical properties of milk and then correlates that to data points based on MyMilk Labs’ research to calculate where the sample is on the continuum, then tells mothers if their milk is “delayed” or “advanced,” relative to the time that has passed since they gave birth.
The device’s first version is currently in a beta pilot with lactation consultants who have used them to scan milk samples from 500 mothers.
MyMilk Labs already has consumer breast milk testing kits that enable mothers to provide a small sample at home that is then sent to MyMilk Labs’ laboratories for analysis. One is a nutritional panel that gives information about the milk’s levels of vitamins B6, B12 and A, calories and fat percentage, along with dietary recommendations for the mother. Another panel focuses on what is causing breast pain, a frequent complaint for nursing mothers. It tests for bacterial or fungal infections and gives antibiotic suggestions depending on what strains are detected.
Though some doctors believe testing kits are unnecessary for the majority of nursing mothers, there is demand for more knowledge about breastfeeding, as demonstrated by the line-up of breast milk testing kits from MyMilk Labs and competitors like Lactation Labs, Everly Well and Happy Vitals. Haramati said on stage that MyMilk Labs plans to eventually transfer some of the tests’ capabilities to the Mylee.
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OmniVis could save lives by detecting cholera-infected water in minutes rather than days
Clean drinking water is one of the most urgent needs in developing countries and disaster-stricken areas, but safety tests can take days — during which tainted water can infect thousands. OmniVis aims to make detection of cholera and other pathogens as quick, simple, and cheap as a pregnancy test. Its smartphone-powered detection platform could save thousands of lives.
OmniVis, which presented on stage at Disrupt SF’s Startup Battlefield today, emerged from research conducted at Purdue University, where CEO and co-founder Katherine Clayton completed her doctorate. She and her advisors were working on the question of using microfluidics, basically very close inspection of the behavior of fluids, to detect cholera bacteria in water.
In case you forgot your Infectious Diseases 101, cholera is a bacterium that thrives in water polluted by fecal matter. When ingested it multiplies and causes severe diarrhea and dehydration — which as you might imagine can become a life-threatening problem if a community is short on clean water.
While normally uncommon, there was a huge cholera outbreak in Haiti in 2010 following a major earthquake there; 665,000 people were infected and more than 8,000 people died. It was this humanitarian disaster that prompted Clayton to look into how such an event might have been prevented. She’s been working on what would become the OmniVis platform since 2013.
“It’s been a long time coming,” she told me.
That’s not uncommon for academic spin-offs with valuable IP but zero product experience. Moving from lab bench to field-ready hardware has taken years of hard work. But the resulting device could upend a costly and slow water testing process that leaves communities at risk in crucial moments.
Existing water testing is generally done at a central location, a lab run by a university, utility, or the local government. It depends on the region — and of course if there has been a disaster, it may not even be functional. Going from sample collection to results may take several days, and it isn’t cheap, either. Clayton estimated it at $100 per sample.
“But that’s just supplies and labor,” she said. “Not the cost of the lab, the PCR machines — which are tens of thousands of dollars — the pipettes, the dyes, the disposables and consumables, the training… not to mention in a lot of areas you’re not just going to walk by a nice central laboratory. Some countries may only have one or two testing facilities.”
Another option is disposable rapid diagnostic tests, more like pregnancy tests than anything, meant for use with stool samples — but their accuracy is low even then, and with cholera diluted in a water source you may as well be flipping a coin.
Such was the state of testing when Haiti had its outbreak and Clayton began looking into it. In 2013 they began investigating microfluidics as a method for detection. It works by exposing a set of chemical reagents, or “primers,” to a water sample. These primers are engineered to bind to bits of cholera’s DNA and then when heated, replicate it — a process called DNA amplification.
The more cholera is present, the more DNA will be available to amplify, and it multiplies to the point where it affects the viscosity of the water — a factor that can be tested by the device. Interestingly, the device in no way “analyzes” the DNA or identifies it; all it does is measure how viscous the water is, which is a highly reliable proxy for how much cholera was present in it to begin with.
It turns out this method is both quick and accurate: In 30 minutes it gives as good or better results as central testing.
“The worst thing we could ever do is say there’s no cholera in the water when there is,” Clayton said. So they’re focused on robust test results over all else. But ultimately the device still had to go from the lab to the real world. To that end the team conducted pilot tests in Haiti, where they worked with local NGOs and communities to get some direct feedback.
What they found was promising — but also resulted in major changes to the product. For one thing, they had to switch from iPhone to Android.
“People feel safer with Android than iPhone, which is considered a luxury item,” Clayton said. They also found that men and women operated the system equally well — the team is 84 percent women, she noted, and their design choices may have crept into the product the same as can happen on what is much more common, a male-dominated team. English and Svengali users likewise did fine. Interestingly, locals were baffled by roman numerals. “That was surprising,” she said, but illustrative of how even the smallest assumptions need to be questioned.
“I love user-centered design,” Clayton said. “I think it’s the only way to get engineering to work. UX and graphic design is not my or my colleagues’ specialty, so we had to get some outside contractors for that.”
The production device, which OmniVis hopes to ship in about six months, should cost around a thousand dollars — but at about $10 per test it will pay for itself quickly, especially considering how much easily it can be deployed and used. A half-hour turnaround on a test that can be performed by an aid worker with an hour’s training is an invaluable tool in a disaster-stricken area where infrastructure like mail and roads may be in disorder.
These devices, by the way, are not bought and paid for by the people who drink the water. Like the water-testing labs, they’ll be owned and operated by NGOs, governments and others with budgets for this kind of thing.
Cholera is the first pathogen the company is aiming to detect, but the system can just as easily detect several others simply by using different disposable tests equipped with different primers. E. Coli could be next — with the proper testing, Clayton said. And others would follow. It’s not hard to imagine an OmniVis device being a must-have for any relief work where water needs to be tested.
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Chris Dixon from a16z announces free crypto startup school at TechCrunch Disrupt
Chris Dixon, a general partner at Andreessen Horowitz, announced a new crypto-related startup school at TechCrunch Disrupt today in San Francisco.
Dixon says that the firm is not looking for equity, but really wants to provide a way to teach some best practices in the emerging field of crypto currency. “We are going to run a startup school for crypto-specific startups and what we’ve learned over the last 7 years as best practices in this category,” Dixon told TechCrunch’s Josh Constine on stage today.
The company doesn’t intend to charge any money, nor will it take any equity in the companies that participate. In Dixon’s words, they are doing this to push the category forward and help crypto startups get going. He hopes that based on the good will of offering this education for free, that startups who participate may end up having a conversation with a16z about possibly getting an investment, but he made clear that this absolutely was not a requirement.
Last year, the firm made its commitment to crypto clear when it established a crypto fund run by Katie Haun. Dixon told TechCrunch at the time of that announcement that his firm had already invested in 20 crypto companies over the previous five years, including Ripple and Coinbase way back in 2013, prior to establishing a fund devoted to crypto.
The company has set up a page on the company website for companies interested in signing up for the crypto startup school.
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Will Smith just dropped $10K on a startup that pitched him on Disrupt’s stage
Actor and Hollywood media mogul Will Smith surprised the TechCrunch Disrupt SF 2019 audience this afternoon by announcing he would invest $10K in a startup that pitched to him onstage as part of an “elevator pitch” contest, where the winner would get to take a selfie with the star. The company, Socionado.com, helps companies with their social media presence. However, what got Smith’s attention was their well-delivered pitch, he said.
The startups didn’t get much time to prepare, having been plucked from the Startup Alley earlier in the day.
In addition to responding well to the pitch itself, Smith also liked the concept and the business model.
“As I built out my social media team, that was the idea — I wanted to take back my storytelling,” said Smith. “I think that’s hugely important.”
“That was really the best pitch so we’re gonna rock a selfie,” Smith said, jumping up to snap a photo with the founder.
That moment when you pitch your startup to Will Smith, get a selfie and an investment of $10K. #TCDisrupt pic.twitter.com/NtDIeYrT9b
— Queenie Wong (@QWongSJ) October 2, 2019
Will smith investing https://t.co/Mwa0pnHkC9
— Talks_With_TJ (@TJ_Overall) October 2, 2019
Smith’s investment strategy isn’t usually this off-the-cuff, however.
Speaking onstage at the Disrupt conference, he also offered more details on his plans for Dreamers VC, the investment firm founded with Japanese soccer star Keisuke Honda, which was announced last year by Honda’s management firm KSK Group.
Smith noted the firm has an interest in “doing good” with its funds — pointing, in particular, to an investment in “Boring tech.” (He actually means The Boring Company, per the Dreamers VC website, where it’s listed alongside a host of others.)
He also offered a little background on how Dreamers VC came to be in the first place.
“Well, you know, I met with [Keisuke Honda] and we just hit it off immediately. And, you know, we felt like there was a beautiful intersection between being able to create businesses, but also to stay focused on solving problems of the world,” Smith explained. Honda already had banking relationships in Japan that were looking to make their way into the U.S.
“So the relationship worked out well,” he said.
Plus, Smith adds, “I had already been investing and he had already been investing and our values were in alignment. We want to solve some of the world’s problems. We want to do well by doing good.”
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Render announces object storage service at TechCrunch Disrupt
It was a big day for startup Render, which participated in the TechCrunch Disrupt Startup Battlefield today. It also announced some upgrades to its managed cloud platform.
First of all, it announced the ability to spin up object storage in the cloud, while greatly simplifying the tasks associated with adding storage. CEO and founder Anurag Goel says that the storage option is something customers have been requesting, and as with their other services, they handle a lot of the heavy lifting for them.
“One of the things that our users want us to do next is to build out object storage. Even though they can use things like Amazon S3 and other cloud storage options, they know that Render is going to be easier for them to use. So they really want object storage, and they want everything in one place,” Goel explained.
If you want to do that today without Render, you would have to spin up a virtual machine in the cloud, attach the storage, set up backup schedules and take care of all of these other associated tasks, and what Render is doing with Render Disk is stripping that all away and managing the process for them.
While the startup was at it, it also developed a concept called infrastructure as code. This allows developers to define their infrastructure requirements in a YAML file. When the developer sends the file to GitHub, Render can build the infrastructure for the customer on the fly based on the contents of this file.
Finally, they are offering a one-click launch to customers. This could come in handy for companies that are offering free trials or open-source tools to enable users to launch their applications with a single click from GitHub and it will load all of the required files.
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Brex wants to replace startup bank accounts with Brex Cash
Brex, a Silicon Valley fintech darling, has lofty plans to battle big banks —and Stripe.
Code-named “Gemini,” Brex today announced a new product designed to replace and improve the functionality of traditional bank accounts. Brex Cash, as it will be known publicly, is a business cash management account integrated with the Brex Card, a corporate card for startups launched in 2018.
Brex tells us they’ve built the core banking infrastructure from scratch, allowing the company to forgo third-party processing fees and provide a much-needed tech infusion to antiquated banking systems. In partnership with Boston’s Radius Bank, Brex Cash will allow customers to send payments quickly and easily with no transaction fees attached. Rather, Brex plans to reward its users for making or receiving payments using Brex Cash with points redeemable for cash back, travel and air miles. Customers will also receive 1.6% yield on deposits.
It’s not a bank, but in practice, it can replace a bank, says Brex co-founder and co-chief executive officer Henrique Dubugras .
“Our idea is that new businesses —the new Y Combinator companies —we hope a big percent of them never open a bank account,” Dubugras tells TechCrunch.
Brex now has many similarities to a bank. What differentiates it is its lack of physical branches — it’s exclusively digital — and it’s insurance. Traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 per depositor. Brex Cash users are protected by the Securities Investor Protection Corporation (SIPC), a nonprofit agency overseen by the U.S. Securities and Exchange Commission that protects up to $500,000 and specializes in protecting customers of brokerage firms from the loss of cash and securities.
We think we’ve won a lot of credibility. Before, who was going to give their money to a random-ass startup called Brex? -Brex co-CEO Henrique Dubugras
Additionally, Brex invests its customers’ money in a money market mutual fund of U.S. treasury bonds. “If Brex goes out of business, customers’ money will be safe,” the company writes in a press statement. “The only scenario where money could be lost is if the U.S. government defaults.”
Brex Cash user interface
“It’s not that we are inventing this — this model exists with Fidelity,” says Dubugras. “Fidelity isn’t necessarily a bank — we are bringing that concept to businesses to give lower fees, better interest rates, better experiences and more security.”
Brex, a graduate of the winter 2017 Y Combinator cohort, has quickly become a Silicon Valley success story for the ages. The rapid adoption of its startup credit card, which doesn’t require a personal guarantee, and its ability to issue cards instantly and provide higher limits than other options on the market has attracted thousands of customers and venture capitalists. The business, led by a pair of young Brazilian repeat entrepreneurs, including Dubugras and co-CEO Pedro Franceschi, has collected more than $300 million in equity funding, including a $100 million C-2 financing that valued the company at $2.6 billion earlier this year.
“There will always be customers that are skeptical, but I think by starting out with a card, we built a lot of trust,” Dubugras said. “It was us giving them money instead of them giving us money. A few years in … We think we’ve won a lot of credibility. Before, who was going to give their money to a random-ass startup called Brex?”
In the weeks ahead of TechCrunch Disrupt San Francisco, where Dubugras announced Brex Cash on Wednesday, the CEO told TechCrunch that Brex had no immediate fundraising plans and that they were “waiting for the right time” to raise again. As for what’s next, he said the company is discussing the launch of a debit card and plans to add another 100 employees in the next year, bringing the Brex headcount to 400.
The Brex news follows the launch of Stripe Capital, a new offering from payments behemoth Stripe that will make instant loan offers to customers on its platform, and the announcement of the Stripe Corporate Card. Akin to Brex, Stripe will issue a no-fee, no interest rate credit card intended for Stripe customers. Brex and Stripe, two Y Combinator grads, will go head-to-head in a battle for customers, particularly YC grads looking for friendly financial tools.
Immediately following Stripe’s announcements, the business announced a $250 million funding at a $35 billion valuation. Brex may be following a similar playbook, announcing a major product on the heels of a large capital infusion.
Brex Cash represents a new era for the company. Though the product may be costly for Brex, it opens the business up to thousands more potential customers. Now, any startup, regardless of funding, can create a Brex account to store cash, explains Dubugras, and all companies using Brex Cash will be immediately issued a Brex corporate credit card.
“If you’re starting out, if you don’t have funding yet, you can still receive your payments using Brex,” Dubugras said. “That’s a super big deal for us.”
Brex Cash was built under product lead Ritik Malhotra, who joined the team as part of an acquisition of his startup, Elph. Brex poached the company, which was focused on blockchain infrastructure, right out of YC for an undisclosed amount. In retrospect, the deal looks much more like an acqui-hire of Malhotra, who had the digital payments infrastructure acumen necessary to complete this project.
“It’s an easy way to move money, which is the lifeblood of a business,” Malhotra tells TechCrunch of the new product.
Brex Cash is itself not a cash cow for Brex; rather, the startup makes money on purchases made on its corporate card, in which it charges the merchant, not the customer. This model is particularly beneficial when its customers are spending a lot of money, growing quickly and raising capital. In a downturn, however, this model isn’t as attractive.
Brex seems unconcerned with the possibility of an impending recession. Brex writes that even in downturns, entrepreneurs will start companies and attempt to raise money. The Brex Cash product, regardless of the economy, will help Brex better underwrite Brex Cards, as it gives them better access to a customer’s financial health.
In a battle against Stripe, Brex is at a disadvantage. At only two years old, the company may have garnered a lot of credibility in a short time but it doesn’t have the decade of experience building fintech products that Stripe has and, more importantly, it doesn’t have 10 years of customer loyalty.
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