Capital One acquires Brex for steep discount to its peak valuation, but early believers are laughing all the way to the bank | TechCrunch

"There's a feeling of schadenfreude in Silicon Valley when a unicorn stumbles. So when the WSJ broke the news Thursday afternoon that Capital One will acquire Brex for $5.15 billion in cash and stock (Capital One issued an official release confirming the details thirty minutes later), you could practically hear the collective snickering from Sand Hill Road to San Francisco's South Park. That figure represents less than half of Brex's last private-market valuation of $12.3 billion from its 2022 Series D-2 round."

"In the meantime, that early bet - Ribbit was joined by Y Combinator, Kleiner Perkins, DST Global, and individual investors including Peter Thiel and Max Levchin - has multiplied somewhere in the neighborhood of 700-fold. Even accounting for dilution across subsequent rounds, early stakeholders are walking away with the kind of gains that have long made venture capital seem like such an attractive asset class to outsiders."

"Still, the sting of that valuation haircut is sharper when you consider what happened to Brex's chief rival Ramp during the same period. Just as Brex lost momentum several years ago, Ramp went on a tear. The competing expense management fintech has at this point raised $2.3 billion in total equity financing and saw its valuation zoom from $13 billion in March of last year to $32 billion by November across successive funding rounds."

Capital One will acquire Brex for $5.15 billion in cash and stock, less than half of Brex's $12.3 billion private-market valuation from 2022. Early investors who backed Brex’s seed and Series A rounds, including Ribbit Capital, Y Combinator, Kleiner Perkins, DST Global, Peter Thiel, and Max Levchin, are realizing outsized returns from an approximately 700-fold increase on the earliest stakes despite later dilution. Micky Malka's Ribbit led the $7 million Series A. Brex lost momentum while rival Ramp accelerated, raising $2.3 billion and seeing valuation climb from $13 billion to $32 billion across funding rounds. Paper valuation gains can misrepresent underlying performance, but Ramp's traction appears substantial.

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