Cap table management tool Carta valued at $800M with new funding

Carta, formerly known as eShares, has raised $80 million from Meritech and Tribe Capital.

Startups supporting startups are blazing a new trail with support from venture capitalists.

Co-working spaces like The Wing and The Riveter raked in funding rounds this year, as did Brex, the provider of a corporate card built specifically for startups. Now Carta, which helps companies manage their cap tables, valuations, portfolio investments and equity plans, has announced an $80 million Series D at a valuation of $800 million. The company, formerly known as eShares, raised the capital from lead investors Meritech and Tribe Capital, with support from existing investors.

The round brings Carta’s total funding to $147.8 million. Its existing investors include Spark Capital, Menlo Ventures, Union Square Ventures and Social Capital, though the latter didn’t participate in the Series D funding. Tribe Capital, however, is a new venture capital firm launched by Arjun Sethi, who previously led Social Capital’s investment in Carta, Jonathan Hsu and Ted Maidenberg, a trio of former Social Capital partners who exited the VC firm amid its transition from a traditional VC fund to a technology holding company. Tribe is said to be in the process of raising its own $200 million debut fund.

Founded in 2012 by Henry Ward (pictured), the Palo Alto-based company plans to use the latest investment to develop their transfer agent and equity administration products and services to better support startups transitioning into public companies. It also will launch additional products for investors to collect data from their portfolio companies and to manage their back office.

“We’ve come this far by changing how ownership management works for private companies—popularizing electronic securities and cap table software, combined with audit-ready 409As,” Ward wrote in an announcement. “But our ambitions go far beyond supporting privately-held, venture-backed companies.”

Carta, which counts Robinhood, Slack, Wealthfront, Squarespace, Coinbase and more as customers, currently manages $500 billion in equity. This year, Carta expanded its headcount from 310 employees to 450 employees, launched board management and portfolio insights products and completed a study in partnership with #Angels that highlighted the major equity gap female startup employees are victim to.

The study, released in September, revealed that women own just 9 percent of founder and employee startup equity, despite making up 35 percent of startup equity-holding employees. On top of that, women account for 13 percent of startup founders, but just 6 percent of founder equity — or $0.39 on the dollar.

Charge card startup Brex aims for decacorn success

By now, Brex, the young startup that is trying to reinvent corporate credit and charge cards, is well-known in Silicon Valley. The tender age of the company’s co-founders, Henrique Dubugras and Pedro Franceschi, the big-name backers, the $125 million Series C announced last month, the aggressive billboard advertising in San Francisco, and the company’s torrid […]

By now, Brex, the young startup that is trying to reinvent corporate credit and charge cards, is well-known in Silicon Valley. The tender age of the company’s co-founders, Henrique Dubugras and Pedro Franceschi, the big-name backers, the $125 million Series C announced last month, the aggressive billboard advertising in San Francisco, and the company’s torrid growth have all contributed to the swirl of attention. But, of course, it was the valuation at the last round —which placed Brex into the fintech unicorn club — that tops the list.

Recently, Brex offered up a new reason for chatter as it unveiled its new, generous rewards program that was purpose-built for the kind of entrepreneurs who aspire to match Brex’s success. But lost in the buzz are the specifics of how Dubugras and Franceschi have approached the arcane challenge of building a payments start-up.

To better understand that, chief executive Dubugras opened up about his and Fraceshi’s previous start-up, Pagar.me, which was acquired by newly public Brazilian credit card processor StoneCo, the challenges of scaling quickly, how a Brex card compares to traditional corporate card products and the company’s plan to navigate the ups and downs of business cycles. Finally, Dubugras spoken candidly but confidently about the considerable pressures facing the company now that everyone is watching.

Gregg Schoenberg: It’s good to connect again, Henrique. As you know, Brex has gotten a lot of press for having gone from from zero to fabulous in a short time. But for those who have missed the Brex story, what problems are you solving for start-ups?

Henrique Dubugras: One is a case where the founder can’t get a credit card because they don’t have a FICO score or can’t provide a personal guarantee. Another case is when a founder can get a card, but doesn’t want to provide a personal guarantee.

GS: Which is understandable.

HD: Yes, I think it’s not a very smart idea. Brex can solve that because we can issue them a card now without a personal guarantee. Finally, there’s the founder who doesn’t care about the personal guarantee, but there are other things related to the experience of having a credit card that could be much better, and we‘ve solved for that.

GS: The first two speak to a differentiated underwriting approach, but that third issue seems especially challenging.

HD: Yes. On the underwriting side, we take into consideration your cash balances, and the VCs that invested in you. It’s a Silicon Valley way of underwriting that allows you to go from zero to a working card in like five minutes. But in terms of the third use case, yes, we had all of these people telling us, “Hey, it’s impossible to rebuild credit card systems from scratch. No one has done it in the last 20 years.”
Pagar.me Success

GS: That’s why I want to discuss Pagar.me, because I think it provides insight as to how you were able to disprove doubters.

HD: Well, we had built a payments company before, so we kind of knew how to do it and just decided to rebuild everything from scratch. You saw the Stone IPO, right?

GS: I did, and buried deep in the footnotes of the S-1, it points out how much it spent on the remaining amount of Pagar.me for in 2016. So while you and Pedro built something that was a success, it wasn’t like you were able to buy an island with your proceeds.

HD: There’s another part that wasn’t part of the IPO, but no, we still can’t buy an island.

GS: And this narrative that you and Pedro were able to come here from Brazil and in short order wave in all of this amazing funding because you had a huge exit is not accurate. Instead, I see two guys who navigated a very bureaucratic financial system—

HD: Yes.

We had this experience that was pretty unique compared to US payment companies or ones from any other place.

GS: —and figured out a way to build something that was successful.

HD: Correct, but keep in mind that we built more than a product. We built an organization. It had over 100 people, was profitable, had substantial market share, and it got acquired.

GS: To me, a big aspect is that you did it in a Brazilian fintech bootcamp of sorts, because building a payments company there, that achieved scale, when you did it, was hard.

HD: It was really hard. And volume-wise, Pagar.me is a big part of Stone today.

GS: You also had to deal with the regulators quite a bit?

HD: Yes. The Central Bank decided to start regulating financial businesses around the time we started Pagar.me.

GS: Pagar.me provided the short-term financing to all of those merchants doing business online, right?

HD: Correct. We had to raise debt in Brazil in order to factor the receivables to merchants, because prepayments are a big part of the market. We also rented an acquiring license instead of having one ourselves. So, yes, we had this experience that was pretty unique compared to US payment companies or ones from any other place.

GS: I think it would’ve been very hard for someone in the US payments ecosystem to have been confronted with that kind of diverse challenge and come out on top. It seems like a big part of how you hooked those early investors, people like Max [Levchin] saying, “I want to invest in you no matter what you build. I really like your talent.”

HD: Correct. And because Max understood payments so well, he could tell that we knew what we were doing in our area. The same is true for Ribbit Capital, which knew about Pagar.me.

GS Seeing Max invest in a payments company is different than Max investing in a bunny rabbit start-up. In a space like payments, I think it matters a lot that he was behind you early.

HD: True.

GS: So returning to Brex, I’m interested in the rewards program you just announced, which is paradigm-shifting. Your rewards are designed to be used on an ongoing basis as opposed to being accumulated, right?

HD: Exactly. We want you to use all of the rewards, so that every single day you can have the best experience. Also, credit cards have these footnotes saying, “Hey, you can get up to these caps, restrictions and limits,” etc.

GS: Trying to prevent people from optimizing.

HD: Yes. We take a very different approach, where we’re like, “Hey, we’re not going to limit and punish good users and people who want to just use one credit card by adding all these limits and restrictions.”

GS: What’s the Brex Exclusive concept?

HD: The concept is that if Brex is your only card, you get all these benefits. But if it’s not your only card, you can still use Brex, but then you just get reduced benefits.

GS: Couldn’t you argue that right now, Amex, or Chase, or Capital One doesn’t care about your rewards offering? It’s akin to the early days of the roboadvisor space. But as you get bigger, wider in scope and peskier, what’s to stop Chase from introducing the unicorn card with a bounty of rewards?

HD: One is the effect on their legacy technology. You can say, “Why don’t they just change their technology,” right? Well, they have all these regulatory bodies that would say “No, you can’t change your entire technology system, because if you mess up, the whole US financial system might be impacted.”

GS: Can you give a specific example of how this would play out?

HD: Take the credit limit side. All these companies are built to have these static credit limits in which they set their credit limit today and they don’t look at it for two months, three months, six months, etc…

We don’t want to be the stupid company that raises a bunch of money and then starts doing all these stupid things.

GS: Right. But are you comparing a charge card versus a charge card, or a charge card versus a credit card?

HD: Brex is a charge card, but it doesn’t really matter for this concept, because my point is the technology of changing the limit every single day based on real-time data versus the system they have. Implementing a real-time system would be a fundamental shift for them.

GS: What about this idea that you have credit limits that are ten times the amount versus a traditional card? It’s cool, but you guys have access to lots of analytics and data, so you’re not really taking a huge amount of risk.

HD: That’s correct, which is why we have zero losses today.

GS: Today?

HD: To date.

GS: Impressive. Let’s talk about Sutton Bank, which is your issuer bank that you needed to access the Visa Network. What would you do if you got approached by another issuer bank that said, “I love what you’re doing, can we be an issuer bank too?”

HD: It would be something we would consider, but it’s not something we’re focused on right now. We use their license to issue, but we basically do everything. We do the underwriting. We do the technology and everything.
Growth Plans

GS: You’ve been public about wanting to grow out of the start-up world. Where’s next?

HD: We do want to go to a more traditional businesses, a little bit more mature and outside of technology. That’s something that we’re going to probably do sometime next year, but we have to adapt our underwriting model and our product.

GS: Rewards too, right? I can’t see a lot of traditional businesses caring as much about AWS credits.

HD: There’s nothing besides cash back that matters to these companies. We’re going to adapt because that’s what they care more about.

GS: What do you think of this whole blitzscaling ethos?

HD: I’m reading the book right now, actually, but I haven’t reached a conclusion yet. All the examples in the book seem like two-side marketplaces with a lot of network effects and a winner-take-all. That’s not us.

GS: Regardless of model, to say that you’re going to let some fires burn and ignore them… I don’t know if that flies in fintech or in financial services in 2018.

HD: Yes, fintech has this other aspect of it because it’s people’s money. You can’t let buyers burn. But I think there are other aspects to it. Are we going to reach a plan for success or hedge for failure? Are we going to hire faster or hire slower?

GS: Everybody who has raised a big round like you is in hiring mode. Have you encountered recruitment challenges given your youth?

HD: Not in the US. In Brazil, we’ve felt it. There’s so many examples of successful companies founded by very young people. I mean, maybe we’re one year younger than the other guy who did something really good.

GS: What about the idea of building a common culture, because the ink on your business cards is still sort of wet and you’re hiring all these people so quickly?

HD: The question of what kind of culture we want to build is something we think about a lot. Some companies are on the Google or Airbnb side, like, “Hey, we’re a family.” Some are more like Netflix or Apple, which is more like a professional sports team. We’re definitely more towards Netflix or Apple than we are towards Google or Airbnb.

Building a 10- to 20-billion-dollar business is hard. It’s really, really hard.

GS: What do you mean by more professional?

HD: More work-driven, and we’re not into the whole perks thing. Plus, we really like to pay people higher salaries and give them smaller stock grants, because a lot of people in Silicon Valley don’t believe in stock. We’ve said, “Yes, we’ll give you more cash,” and then we save the stock, not for the people who negotiate the best, but for the people who are performing the best over time.

GS: What’s your thinking?

HD: There’s this super premium given to risk, right? It’s for the people who joined when we were nothing and nobody believed in us. That premium is too big, I think, compared to people who will work in this company for a long period of time. I think a lot more of the premiums should be for someone who has spent six, seven, eight years busting their ass and growing this company.

GS: Let’s touch on where you going to put these people: Brazil or “Transaction Alley” in Atlanta?

HD: We’re thinking about it. I think Vancouver is the main candidate for now.

GS: Why there?

HD: You can get visas really quickly.

GS: Given your need for speed, are you worried about controlling your spending while you look to grow quickly?

HD: Honestly, we have the opposite problem. Keep in mind that Pagar.me was built with $300,000. It was the only money we raised for that company.

GS: Really?

HD: Yes. For us, not spending money is the default. But now we have a lot of money, and we need to invest it to grow faster, so we are constantly actively thinking of ways of spending more.

GS: It sounds like you’re struggling with this.

HD: It’s just hard because we don’t want to be the stupid company that raises a bunch of money and then starts doing all these stupid things. But we also need to invest to grow faster, so finding that balance—

GS: —Acquiring customers can be expensive.

HD: Yes, but for us, that’s not even the thing because our market is so niche, I can’t just put a couple hundred grand on Google. It just doesn’t work because we’re so niche.

GS: Right.

HS: But we definitely have an issue of how to deploy capital more than we have and how not to do it.

GS: Well, I suppose you could just advertise on more billboards.

HS: Actually, that’s cheap! There was an article about this. We spent $300,000 for three months for all of San Francisco.

GS: I’d like to close by talking about what it means to be one the hottest young start-ups in the Bay Area. And the fact that at some point, a recession is coming. To the first issue, are you concerned that given your rapid ascent, you can’t make mistakes quietly because everyone is watching you?

HD: Yes. I definitely feel that pressure. But I feel more confident because we’re doing this for a second time, in a market that we know. And I really like our executive team. Plus, there’s a lot of stuff we’ve already figured out with Pagar.me in terms of management and culture and what the scale problems will look like.

I think that anyone who says they know how to deal with a recession, it’s not true.

GS: Still, it’s a lot of pressure given your valuation and the expectations that come with it.

HD: Yes. I’m definitely scared because it’s a lot of responsibility, and I won’t consider Brex a success unless I give my investors a ten- to twenty-X return. Building a 10- to 20-billion-dollar business is hard. It’s really, really hard.
Business Cycle

GS: You have to become the next Stripe… Let’s conclude by talking business cycles. When I talk to many CEOs, they will feed me a line like, “Actually, we’re going to be great in a recession — even better under a recession,” right? While true in some cases, it’s mostly false.

HD: Yes.

GS: So what happens when the business cycle changes, there isn’t as much VC activity, and you still have to figure out how to grow?

HD: I think that anyone who says they know how to deal with a recession, it’s not true. Because every single recession is very different than the other. 2008 was completely different than 2001. There’s no one person who knows how to deal with all of them because they’re all very different.

GS: I agree.

HD: The only thing we can do is the big-picture playing, by one, raising more money than you need — which we did — and two, having levers of spending that you can cut very quickly.

GS: Perhaps this is where your Brazilian lineage helps, because you grew up in a country that had a lot of volatility.

HD: 100 percent.

GS: With prices changing on the store shelves from the morning to the evening.

HD: Well, we weren’t born in that time, but we heard our parents talk about it.

GS: Oh that’s right. I forgot.

HD: The thing we learned most from that is that nothing’s done until it’s done. Coming from Brazil, this fact-oriented culture was ingrained in us. We didn’t even celebrate closing the round here before the wires hit.

GS: Last question: If you ultimately face a worthy competitor focused squarely in your space, will it be from another Henrique and Pedro, or will it be from a big player?

HD: It would be a fintech company that adds this product. I don’t think it’ll be Amex or Chase. I think it will be a PayPal or a Square or an Adyen or a CyberSource. They are not the legacy guys, so they don’t have the problems that banks have.

GS: Gotcha.

HD: But I don’t think it’ll be another Henrique and Pedro, honestly. So…

GS: Well, I wish you luck on that.

This interview has been edited for content, length and clarity.

Brex has partnered with WeWork, AWS and more for its new rewards program

Brex cardholders can now accrue and spend points on AWS, Twilio, SalesForce, WeWork, Instacart and more.

Brex, the corporate card built for startups, unveiled its new rewards program today.

The billion-dollar company, which announced its $125 million Series C three weeks ago, has partnered with Amazon Web Services, WeWork, Instacart, Google Ads, SendGrid, Salesforce Essentials, Twilio, Zendesk, Caviar, HubSpot, Orrick, Snap, Clerky and DoorDash to give entrepreneurs the ability to accrue and spend points on services and products they use regularly.

Brex is lead by a pair of 22-year-old serial entrepreneurs who are well aware of the costs associated with building a startup. They’ve been carefully crafting Brex’s list of partners over the last year and say their cardholders will earn roughly 20 percent more rewards on Brex than from any competitor program.

“We didn’t want it to be something that everyone else was doing so we thought, what’s different about startups compared to traditional small businesses?” Brex co-founder and chief executive officer Henrique Dubugras told TechCrunch. “The biggest difference is where they spend money. Most credit card reward systems are designed for personal spend but startups spend a lot more on business.”

Companies that use Brex exclusively will receive 7x points on rideshare, 3x on restaurants, 3x on travel, 2x on recurring software and 1x on all other expenses with no cap on points earned. Brex carriers still using other corporate cards will receive just 1x points on all expenses.

Most corporate cards offer similar benefits for travel and restaurant expenses, but Brex is in a league of its own with the rideshare benefits its offering and especially with the recurring software (SalesForce, HubSpot, etc.) benefits.

San Francisco-based Brex has raised about $200 million to date from investors including Greenoaks Capital, DST Global and IVP.  At the time of its fundraise, the company told TechCrunch it planned to use its latest capital infusion to build out its rewards program, hire engineers and figure out how to grow the business’s client base beyond only tech startups.

“This is going to allow us to compete even more with Amex, Chase and the big banks,” Dubugras said.

Lessons from building Brex into a billion-dollar startup

Henrique Dubugras Contributor Share on Twitter Henrique Dubugras is the founder Brex, the billion-dollar corporate credit provider for startups. When I think about my experience as an immigrant and entrepreneur in Silicon Valley, I remember growing up in Brazil and how we saw tech founders and CEOs as kings. We imagined what it would be […]

When I think about my experience as an immigrant and entrepreneur in Silicon Valley, I remember growing up in Brazil and how we saw tech founders and CEOs as kings. We imagined what it would be like to assume the throne.

But these weren’t just any kings. Silicon Valley was the kingdom of nerds and underdogs. We identified with these guys, they were just like us. We were fed the myth of a Silicon Valley meritocracy, and the illusion that all you needed was ambition, determination, and a good idea to meet the right person and get funded.

What we didn’t understand was that this myth was not completely rooted in reality. Not everyone has access to the American Dream, and those who do have a track record of success before they’re given their moment to prove, or in our case, pitch ourselves.

Part of this disconnect was cultural. In Brazil, when I began my first startup, Pagar.me, a payment processing company, my co-founder Pedro Franceschi and I were two 16 year-old kids who learned how to code before we were ten. While it was hard for people to take us seriously initially—I mean, would you quit your job to work for two 16 year- olds? Being so young also worked to our advantage; it revealed that we were passionate, driven, and invested in tech at an age that we didn’t need to be.

Once we got our start-up off the ground, our employees were as invested in us as we were invested in them and the company. That’s because in Brazil, most of us grew up with parents that stayed their whole lives at the same company. You grew with the company, and that’s the approach we took when it came to hiring for our first company: who did we see sharing our same vision and growing with us?

Coming to the United States was almost a completely opposite experience. The barrier of entry was much higher. You have to go to the right college, graduate from right incubator programs, develop relationships with the right VCs, and have at least one successful startup under your belt before anyone would even consider booking a meeting with you.

Pedro and I had to carefully position ourselves before we even got to the Valley. When we finally did get to the U.S., we had already launched a successful startup and we were accepted to Stanford. Soon after, we were accepted by Y-Combinator, and that’s where we built relationships with the key players that would open up the doors for future meetings.

With our current startup, Brex,  we found that there weren’t just cultural differences at play, but different approaches we needed to take in order for our business to be successful. For example, in Brazil, we bootstrapped our first startup, and as a result, we had to find our product-market fit immediately. When you are so cash-constrained, it also limits how much you can build your company, and you think in terms of short-term wins instead of sustained growth. Your growth strategy is confined and you’re constantly reacting to your immediate client demands.

In the U.S., VCs and angel-investors aren’t interested in the short-term. They’re interested in long-term growth and how you are going to deliver 10x profits over a ten year period. Our strategy could no longer be: plan as we go and grow with our customer. Instead, we needed to deliver a roadmap, and when that roadmap changed or evolved, communicate those changes and adopt a culture of transparency.   

Additionally, we learned how difficult it is to find and retain  talent in the U.S.; it can feel like a Sisyphean task. Millennials for example, spend less than two years on average at a job, and if you spend six years or more at the same company, recruiters will actually ask you: “why?” So how can you build a company for the long-term in an environment where employees are not personally invested in the growth of your company?

We also learned that many successful tech startups offer stock options to their early employees, but as the company evolves and changes over time, those same stock options are not offered to future employees. This creates the exact opposite of a meritocracy. Why would a new employee work harder, longer, and bring more to the table if you are not going to be compensated for it?

Instead of using this broken model, we have invested in paying our team higher wages upfront, and based on performance, we award our team members with stock options. We want to be a company that people are proud of working at longterm, and we want to create a culture that is merit-based.

While some of the myths that we first believed in about Silicon Valley are now laughable looking back, they were also really instructional as to how we wanted to build our company and what pitfalls we wanted to avoid.

Even though nearly half of tech startups are founded by immigrant entrepreneurs, we have a cultural learning curve in order to have the opportunity to be “the next unicorn.” And maybe that’s the point, we’re experiencing a moment in time during which myths and unicorns no longer serve us, and what we need instead is the background, experience, and vision to create a company that is worth the hype.

These are the most successful companies to emerge from Y Combinator

A look at the 20 most successful companies to come out of Y Combinator.

Earlier this month, Brex, a credit card provider to startups, announced it had raised $125 million at a $1.1 billion valuation.

The round was impressive for a couple of reasons: The founders are a pair of 22-year-olds that had set out to build a virtual reality company before pivoting to payments, and they had only completed Y Combinator, a well-known Silicon Valley startup accelerator, the year prior.

Y Combinator is responsible for many successes in the startup world, certainly more than its fellow accelerators, which are all known to provide early-stage companies with a seed investment — in YC’s case, $150,000 — mentorship and educational resources through a short-term program that culminates in a demo day.

Today, YC has released the latest list of its most successful companies since it began backing startups in 2005. Ranked by valuation and/or market cap, Brex, sure enough, is the youngest company to crack the top 20:

  1. Airbnb: An online travel community and room-sharing platform founded by Brian Chesky, Joe Gebbia and Nathan Blecharczyk. Valuation: $31 billion. YC W2009.
  2. Stripe: A provider of an online payment processing system for internet businesses founded by John and Patrick Collison. Valuation: $20 billion. YC S2009.
  3. Cruise: Acquired by GM in 2006, the company is building autonomous vehicles. It was founded by Kyle Vogt and Daniel Kan. Valuation: $14 billion. YC W2014.
  4. Dropbox: A file hosting service and workplace collaboration platform founded by Drew Houston and Arash Ferdowsi that went public in March. Market cap: >$10 billion. YC S2007.
  5. Instacart: A grocery and home essentials delivery service founded by Apoorva Mehta, Max Mullen and Brandon Leonardo. Valuation: $7.6 billion. YC S2012.
  6. Machine Zone: A mobile games company, founded by Mike Sherrill, Gabriel Leydon and Halbert Nakagawa, known for “Game of War.” Valuation: >$5 billion. YC W2008.
  7. DoorDash: An app-based food delivery service founded by Tony Xu, Stanley Tang and Andy Fang. Valuation: $4 billion. YC S2013.
  8. Zenefits: The provider of human resources software for small and medium-sized businesses founded by Laks Srini and Parker Conrad. Valuation: $2 billion. YC W2013.
  9. Gusto: The provider of software that automates and simplifies payroll for businesses, founded by Josh Reeves, Tomer London and Edward Kim. Valuation: $2 billion. YC W2012.
  10.  Reddit: An online platform for conversation and thousands of communities founded by Alexis Ohanian and Steve Huffman. Valuation: $1.8 billion. YC S2005.
  11.  Coinbase: A digital cryptocurrency exchange and wallet platform founded by Brian Armstrong and Fred Ehrsam. Valuation ~$1.6 billion. YC S2012.
  12.  PagerDuty: A digital ops management platform for businesses founded by Baskar Puvanathasan, Andrew Miklas and Alex Solomon. Valuation: $1.3 billion. YC S2012.
  13.  Docker: A platform for applications that gives developers the freedom to build, manage and secure business-critical applications, founded by Solomon Hykes and Sebastien Pahl. Valuation: $1.3 billion. YC S2010.
  14.  Ginkgo Bioworks: A biotech company focused on designing custom microbes founded by Reshma Shetty, Jason Kelly, Barry Canton and others. Valuation: >$1 billion. YC S2014.
  15.  Rappi: A Latin American on-demand delivery startup founded by Felipe Villamarin, Simon Borrero and Sebastian Mejia. Valuation: >$1 billion. YC W2016.
  16.  Brex: A B2B financial startup that provides corporate cards to startups. Its founders include Henrique Dubugras and Pedro Franceschi. Valuation: $1.1 billion. YC W2017.
  17.  GitLab: A developer service founded by Sid Sijbrandij and Dmitriy Zaporozhets that aims to offer a full lifecycle DevOps platform. Valuation: $1.1 billion. YC W2015.
  18.  Twitch: An Amazon-acquired live-streaming platform for video games used by millions. Its founders include Emmett Shear, Justin Kan, Michael Seibel and Kyle Vogt. YC W2007.
  19.  Flexport: A logistics company that moves freight globally by air, ocean, rail and truck founded by Ryan Petersen. Valuation: ~$1 billion. YC W2014.
  20.  Mixpanel: A user analytics platform that helps each person at a business understand its users, founded by Suhail Doshi and Tim Trefren. Valuation: >$865 million. YC S2009.

The full list of Y Combinator’s 100 most successful companies is available here.

These are the most successful companies to emerge from Y Combinator

A look at the 20 most successful companies to come out of Y Combinator.

Earlier this month, Brex, a credit card provider to startups, announced it had raised $125 million at a $1.1 billion valuation.

The round was impressive for a couple of reasons: The founders are a pair of 22-year-olds that had set out to build a virtual reality company before pivoting to payments, and they had only completed Y Combinator, a well-known Silicon Valley startup accelerator, the year prior.

Y Combinator is responsible for many successes in the startup world, certainly more than its fellow accelerators, which are all known to provide early-stage companies with a seed investment — in YC’s case, $150,000 — mentorship and educational resources through a short-term program that culminates in a demo day.

Today, YC has released the latest list of its most successful companies since it began backing startups in 2005. Ranked by valuation and/or market cap, Brex, sure enough, is the youngest company to crack the top 20:

  1. Airbnb: An online travel community and room-sharing platform founded by Brian Chesky, Joe Gebbia and Nathan Blecharczyk. Valuation: $31 billion. YC W2009.
  2. Stripe: A provider of an online payment processing system for internet businesses founded by John and Patrick Collison. Valuation: $20 billion. YC S2009.
  3. Cruise: Acquired by GM in 2006, the company is building autonomous vehicles. It was founded by Kyle Vogt and Daniel Kan. Valuation: $14 billion. YC W2014.
  4. Dropbox: A file hosting service and workplace collaboration platform founded by Drew Houston and Arash Ferdowsi that went public in March. Market cap: >$10 billion. YC S2007.
  5. Instacart: A grocery and home essentials delivery service founded by Apoorva Mehta, Max Mullen and Brandon Leonardo. Valuation: $7.6 billion. YC S2012.
  6. Machine Zone: A mobile games company, founded by Mike Sherrill, Gabriel Leydon and Halbert Nakagawa, known for “Game of War.” Valuation: >$5 billion. YC W2008.
  7. DoorDash: An app-based food delivery service founded by Tony Xu, Stanley Tang and Andy Fang. Valuation: $4 billion. YC S2013.
  8. Zenefits: The provider of human resources software for small and medium-sized businesses founded by Laks Srini and Parker Conrad. Valuation: $2 billion. YC W2013.
  9. Gusto: The provider of software that automates and simplifies payroll for businesses, founded by Josh Reeves, Tomer London and Edward Kim. Valuation: $2 billion. YC W2012.
  10.  Reddit: An online platform for conversation and thousands of communities founded by Alexis Ohanian and Steve Huffman. Valuation: $1.8 billion. YC S2005.
  11.  Coinbase: A digital cryptocurrency exchange and wallet platform founded by Brian Armstrong and Fred Ehrsam. Valuation ~$1.6 billion. YC S2012.
  12.  PagerDuty: A digital ops management platform for businesses founded by Baskar Puvanathasan, Andrew Miklas and Alex Solomon. Valuation: $1.3 billion. YC S2012.
  13.  Docker: A platform for applications that gives developers the freedom to build, manage and secure business-critical applications, founded by Solomon Hykes and Sebastien Pahl. Valuation: $1.3 billion. YC S2010.
  14.  Ginkgo Bioworks: A biotech company focused on designing custom microbes founded by Reshma Shetty, Jason Kelly, Barry Canton and others. Valuation: >$1 billion. YC S2014.
  15.  Rappi: A Latin American on-demand delivery startup founded by Felipe Villamarin, Simon Borrero and Sebastian Mejia. Valuation: >$1 billion. YC W2016.
  16.  Brex: A B2B financial startup that provides corporate cards to startups. Its founders include Henrique Dubugras and Pedro Franceschi. Valuation: $1.1 billion. YC W2017.
  17.  GitLab: A developer service founded by Sid Sijbrandij and Dmitriy Zaporozhets that aims to offer a full lifecycle DevOps platform. Valuation: $1.1 billion. YC W2015.
  18.  Twitch: An Amazon-acquired live-streaming platform for video games used by millions. Its founders include Emmett Shear, Justin Kan, Michael Seibel and Kyle Vogt. YC W2007.
  19.  Flexport: A logistics company that moves freight globally by air, ocean, rail and truck founded by Ryan Petersen. Valuation: ~$1 billion. YC W2014.
  20.  Mixpanel: A user analytics platform that helps each person at a business understand its users, founded by Suhail Doshi and Tim Trefren. Valuation: >$865 million. YC S2009.

The full list of Y Combinator’s 100 most successful companies is available here.

How the 22-year-old founders of Brex built a billion-dollar business in less than 2 years

Henrique Dubugras and Pedro Franceschi, the co-founders of Brex, have raised $125 million at a $1.1 billion valuation just four months after the startup’s public launch.

When Brazilian-born Henrique Dubugras and Pedro Franceschi met at 16 years old, they bonded over a love of coding and mutual frustrations with their strict mothers, who didn’t understand their Mark Zuckerberg-esque ambitions. 

To be fair, their moms’ fear of their hacking habits only escalated after their pre-teen sons received legal notices of patent infringements in the mail. A legal threat from Apple, which Franceschi received after discovering the first jailbreak to the iPhone, is enough to warrant a grounding, at the very least.

Their parents implored them to quit the hacking and stop messing around online.

They didn’t listen.

Today, the now 22-year-olds are announcing a $125 million Series C for their second successful payments business, called Brex, at a $1.1 billion valuation. Greenoaks Capital, DST Global and IVP led the round, which brings their total raised to date to about $200 million.

San Francisco-based Brex provides startup founders access to corporate credit cards without a personal guarantee or deposit. It’s also supported by the likes of PayPal founders Peter Thiel and Max Levchin, the former chief executive officer of Visa Carl Pascarella and a handful of leading venture capital firms. 

Brex is off to one of the most exciting starts we’ve ever seen,” IVP’s Somesh Dash said in a statement.

The financing makes them some of the youngest unicorn founders in history and puts them in a rare class of startups that have galloped into unicorn territory at such a fast clip. Brex was founded in the winter of 2017. It only launched publicly in June 2018.

How’d they do it?

“I’ve had two failed attempts, one successful attempt and one on the way to being a successful attempt,” Brex CEO Dubugras told TechCrunch while reciting a lengthy resume.

At 14, when most of us were worrying about what the first year of high school would bring us, Dubugras was more concerned about what his next business attempt would be. He had already built a successful online game but was forced to shut it down after receiving those patent infringement notices.

Naturally, he used the cash he earned from the game to start a company — an education startup meant to help Brazilian students apply to American schools. He himself was hoping to get into Stanford and had learned quickly how little Brazilian students understood of the U.S. college application process.

In some respects, the company was a success. It garnered 800,000 users but failed to make any money. His small fortune wasn’t enough to scale the business.

“There aren’t a lot of VCs in Brazil that are willing to fund 15-year-olds,” Dubugras told TechCrunch.

Shortly after folding the edtech, he met Franceschi, a Brazilian teen from Rio — Dubugras is from São Paulo — who understood his appetite for innovation and was just as hungry for success. The pair got to talking and because of Franceschi’s interest in payments, they started Pagar.me, the “Stripe of Brazil.”

Pagar.me raised $30 million, amassed a staff of 100 and was processing up to $1.5 billion in transactions when it sold. Finally, they had a real success under their belt. Now it was time to relocate. 

“We wanted to come to Silicon Valley to build stuff because everything here seemed so big and so cool,” Dubugras said.

And come to Silicon Valley they did. In the fall of 2016, the pair enrolled at Stanford. Shortly after that, they entered Y Combinator with big dreams for a virtual reality startup called Beyond. 

“I think three weeks in we gave it up,” Dubugras said. “We realized we aren’t the right founders to start this business.”

He credits Y Combinator with helping him realize what they were good at — payments.

As founders themselves, Dubugras and Franceschi were hyper-aware of a huge problem entrepreneurs face: access to credit. Big banks see small businesses as a risk they aren’t willing to take, so founders are often left at a dead-end. Dubugras and Franceschi not only had a big network of startup entrepreneurs in their Rolodex, but they had the fintech acumen necessary to build a credit card business designed specifically for founders.

So, they scrapped Beyond and in April 2017, Brex was born. The startup picked up momentum quickly, so much so that the pair decided to drop out of Stanford and pursue the business full time.

Simplifying financial access

Brex doesn’t require any kind of personal guarantee or security deposit and it doesn’t use third-party legacy technology; its software platform is built from scratch.

It simplifies a lot of the frustrating parts of corporate expenses by providing companies with a consolidated look at their spending. At the end of each month, for example, a CEO can easily see how much the entire company spent on Uber or Amazon. 

Plus, Brex can give entrepreneurs a credit limit that’s as much as 10 times higher than what they’d receive elsewhere and they can issue cards, virtual cards at least, moments after the online application is complete.

“We have a very similar effect of what Stripe had in the beginning, but much faster because Silicon Valley companies are very good at spending money but making money is harder,” Dubugras explained.

As part of their funding announcement, Brex said it will launch a rewards program built with the needs and spending patterns of founders in mind. Beyond that, they plan to use the capital to hire engineers and figure out how to grow the business’s client base beyond only tech startups.

“We want to dominate corporate credit cards,” Dubugras said. “We want every single company in the world, whenever they do businesses expenses, to do it on a Brex card.”