IPO hopeful Brex scored major win to sell in the EU, plans UK expansion

Financial services provider Brex has announced a significant achievement in its global expansion strategy, securing a license to operate directly within the European Union. This pivotal milestone grants Brex the authorization to issue credit and debit cards and offer its comprehensive spend management solutions to businesses across all 30 EU member states without requiring workarounds, as confirmed by co-founder and CEO Pedro Franceschi in a recent blog post.

Previously, while Brex supported transactions in 60 currencies across 200 countries, its direct product offerings were limited to companies with a U.S. operational base. The newly acquired EU authorization permits Brex to supply its spend management tools, including card issuance, and embedded payment solutions to European companies and startups. However, the company has noted that banking and bill pay services will not be available initially, with plans to introduce these features in the future.

This development is poised to benefit European startups significantly. Brex has built its reputation by providing expense management cards to startups that might not qualify for traditional banking services. Although the absence of immediate banking services means the youngest EU startups will need to evaluate their options, the expansion marks a substantial step forward.

Looking ahead, Brex’s CEO Pedro Franceschi has expressed intentions to expand the company’s presence in the United Kingdom, although specific details regarding these plans have not yet been disclosed.

Brex is strategically positioning itself for a future Initial Public Offering (IPO). Franceschi indicated in December that the company is on track to achieve cash-flow neutrality in 2025, a crucial step toward its IPO goals. Furthermore, reports from February suggested Brex is projected to reach $500 million in revenue this year, a notable turnaround from its challenges in 2023, which included layoffs and concerns over high cash burn.

The company’s international expansion occurs as its U.S. fintech rivals are also experiencing growth. Competitors such as Ramp have seen substantial funding rounds, reaching a $22.5 billion valuation recently, while Mercury successfully raised $300 million, doubling its valuation to $3.5 billion.

Brex last announced new equity venture capital funding in 2022, securing $300 million in a Series D-2 round that valued the company at $12.3 billion. More recently, in March 2024, Brex closed an oversubscribed securitization issuance, selling $260 million in bonds backed by its spend management receivables, which are utilized to manage its cash-intensive operations.