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 30 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.
Before everyone sharpens their knives, consider that for the VCs who backed Brex at its outset, the sale is a triumph.
Micky Malka’s Ribbit Capital, which led Brex’s $7 million Series A soon after its 2017 founding, is likely staring at a very handsome return. Reached by phone this afternoon, Malka declined to offer specifics, but as a Brex board member from the outset and the company’s biggest shareholder, he was unsurprisingly enthusiastic about the deal: “We’re excited for the team, which was one of the youngest YC teams at the time. I’ve known [the founders] since they were 16. Capital One will be a great partner, and their ability to scale [as part of the bank] is good for America.”
Indeed, 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.
You could argue whether those kinds of paper gains across a dizzying number of financing events means that much (that’s definitely not always the case). Still, assuming …