When a unicorn stumbles across Silicon Valley, there’s a sense of schadenfreude. So when the WSJ broke the news Thursday afternoon that Capital One will acquire Brax for $5.15 billion in cash and stock (Capital One issued a Official release Thirty minutes later, confirming the details), you can practically hear the collective snickering from Sand Hill Road to San Francisco’s South Park. That figure represents less than half of Brax’s latest private-market valuation $12.3 billion from its 2022 Series D-2 circular

Before everyone sharpens their knives, consider that the sale is a victory for the VCs who backed BREX at its inception.

Mickey Mulca’s Rebate Capital, which led a $7 million Series A round shortly after Brax’s founding in 2017, is likely looking at handsome returns. We’ve reached out to Malka for more information on that front.

Meanwhile, that initial bet — Ribbit was joined by Y Combinator, Kleiner Perkins, DST Global, and individual investors including Peter Thiel and Max Levchin — has multiplied somewhere around 700 times. Even accounting for dilution throughout later rounds, early stakeholders are walking away with the kind of profits that have long made venture capital seem like such an attractive asset class to outsiders.

Still, the sting of that valuation haircut is even sharper when you consider what happened to Brax’s main rival, Ramp, at the same time. Just as Brax had lost momentum several years earlier, the ramp was torn up. The competitive expense management fintech has raised $2.3 billion in total equity funding so far and its valuation has grown from $13 billion in March last year. $32 billion by November throughout Continuously funds circular.

You could argue that profits mean so much across a staggering number of these types of paper funding events (this is certainly not always the case). Still, assuming the ramp is presenting a true picture to the world, its appeal is undeniable. The company announced last October that it had surpassed $1 billion in annual recurring revenue and secured more than 50,000 customers. The contrast is perhaps even more painful for Breks’ later-stage investors, who have seen a competitor take them into their laps more than once as they waited to exit.

The Capital One deal comes at an inflection point for Brax. Just five months ago, the company announced that it had received a license to operate in the European Union. CEO Pedro Franceschi wrote in a blog post at the time, the move enabled Brex to “issue credit and debit cards directly and offer its expense management products to any business in all 30 EU countries that does not require a solution.” Previously, the company could only work with EU companies that maintained a US presence, a significant limitation for a global player.

For Capital One, the timing is as good as it gets. The bank, which has already absorbed Discover Financial a $35 billion deal Last May, Brax gained its tech platform and client roster — reportedly, TikTok, Robinhood, Intel — as well as immediate access to European corporate banking customers through its new EU license. (TechCrunch reached out to Brax for more information.)

The $13 billion in deposits overseen by BREX partners at banks and money-market funds also likely sweetened the pot.

The founders, Brazilian entrepreneurs Pedro Franceschi and Henrique Dubugras, dropped out of Stanford to launch Brex in 2017 after being accepted into YC’s winter 2017 “batch,” initially developing virtual reality concepts. But they were forced to turn to Payments, which they sold — at age 16 — to a Brazilian payment processor startup that raised $30 million and sold for more than $1 billion to one of their strategic investors.

Dubugras stepped down from day-to-day operations to serve as chairman of the board in 2024; Franceschi will remain CEO after the acquisition.

Like almost every startup, Brax’s path wasn’t without its bumps. was a Suspicious cycle In 2019, when the then 23-year-old co-CEO, who had never run a restaurant, bought San Francisco’s beloved South Park Cafe. The pair envisioned dining before going to an exclusive lounge for Brex card members, a timing decision that proved spectacularly ill-advised, when COVID-19 shut down much of San Francisco for more than a year.

Then, in 2022, as the macroeconomic picture darkened and VCs started demanding real profits from their portfolio companies, BREX took a decision that created Ill enough; It abandoned thousands of small- and medium-sized business customers, telling them their accounts would be closed unless they secured “professional” financing from VCs, angels or accelerators.

The move, designed to focus resources on high-margin enterprise clients and a new SaaS business, struck many as tone-deaf. The company that built its reputation serving underbanked startups was suddenly showing its champions the door (how the move felt at the time).

The trick might be to position the brakes for this exit. By focusing on corporate clients with deep pockets and predictable revenue streams, the company has stabilized its business model, even ramping up its fundraising. (Mercury, another competitor, doubled its valuation to $3.5 billion with a $300 million raise last March. To steal some of the attention given to the ramp in 2025, Mercury recently shared with Fortune that it hit a rate $650 million in annual recurring revenue.).

Capital One said it expects to close the deal in the second quarter. For Brax’s later-stage investors, including TCV, GIC, Baillie Gifford, Madrone Capital Partners, Durable Capital Partners, Valiant Capital Management and Base10, all of which invested $7.4 billion valuation Or higher, departures may not be exactly what they expected, but they are still fluid, which counts for something in today’s climate.

Pictured above: Pedro Franceschi, co-founder and CEO of Breaks