Brex, which provides credit to startups and small businesses, is laying off 300 people around the world, many of them in Israel. There is now fear for the company’s development center in Israel, which was formed when Brex bought local startup Weav in 2021. “Globes” has learned that several employees in Israel have been summoned for pre-dismissal hearings, while others have been offered positions in the US, apparently with a view to the closure of the development center in Israel. The manager of the Israeli center, Nadav Lidor, will remain in Israel for the time being, and a decision on his future with the company will be made over the coming months, after he was offered the possibility of a move to the US.
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Brex, which grew strongly during the Covid pandemic and with the accelerated flow of capital to the technology sector, has decided to cut 20% of its workforce. The company found that its expenditure rate was out of line with its rate of growth. “Looking inward, I realized we grew our org too quickly, making it harder to move at the speed we once did,” Brex co-founder and CEO Pedro Franceschi wrote in a blog post. Tech industry website “The Information” revealed last week that the company’s annual revenue rate was $200 million in the last quarter, and had slowed after the first half of 2023 was very positive following the collapse of Silicon Valley Bank. Many casualties of that collapse transferred their accounts to companies friendly to the technology industry like Brex, and boosted its annual profit by about a third. It now turns out that the profit growth was mainly in the first quarter of 2023, and that Brex is finding it difficult to replicate last year’s growth.
Brex’s growth slowed in mid-2022, when interest rates rose in the US, which affected companies’ appetite for loan finance. The company then tried to expand into enterprise expenses management through providing corporate credit cards that can be managed remotely, but it is estimated to have taken only a small share of that market. In addition, the company has decided to reduce risk in providing loans by ceasing to provide further service to companies that are not supported by venture capital funds, and by reducing credit lines to existing customers.
No comment was forthcoming from Brex.
Published by Globes, Israel business news – en.globes.co.il – on January 31, 2024.
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