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Capital One to acquire Brex for $5.15B

reuters.com

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Re: Capital One to acquire Brex for $5.15B

#311

Post by ivanbalepin »

blindriver wrote: post #302
swyx wrote: post #293

Earlier quoted context omitted.

sorry how did employees get fucked? theres more money after the 1.7B.

All the investors before 2019 got multiples of their investment. So series B is worth about 250M and series C is worth about 625M. Series C-2 is worth about 1.5B. Series D is worth 425M and Series D2 is worth 300M because of LP. That's a total of 3B. That leaves 2B for everyone else. Most employees are going to get fucked big time, especially the ones after 2019. They will get a small fraction of their RSUs and all t…

According to Peter Walker from Carta:

> the company re-cap'd employees at a more realistic valuation a couple years back. So looks like all employees benefited here which is a major win. Respect to the founders for looking out!

Re: Capital One to acquire Brex for $5.15B

#312

Post by jjfoooo4 »

qeternity wrote: post #227
DSingularity wrote: post #225

Earlier quoted context omitted.

Why do you start a startup? Is it to build an idea you believe in and believe it is potentially lucrative or is it so you can go through the motions, say the trendy things, and get outcompeted because in the end you are primarily focused on getting acquired with a 1B exit?

Spoken like someone who has never started a business. Brex raised much less than $5b and Capital One apparently thinks it is worth more than that (otherwise they wouldn’t buy it). This is called value creation.

I think the investors who put $300m in at a $12b valuation would disagree

Re: Capital One to acquire Brex for $5.15B

#313

Post by seattle_spring »

HWR_14 wrote: post #286
irjustin wrote: post #224

Earlier quoted context omitted.

There's a lot of speculation about how different rounds will get paid out. Unless someone has insider information and is willing to post, we have absolutely no idea who was made whole, who lost and/or who gained. At the size of Brex, anything is possible and it depends on how much leverage they had at each priced round. Guaranteed payout, equal, founders multiplier, lead multipier. All possible. Additionally, what pe…

What is a founder/lead multiplier?

An opaque method of ensuring investors get a huge payout at the expense of employees with ISOs that convert to common stock. Many startups refuse to share this multiplier with candidates, and will instead insist their equity grant is "competitive with the market" and "very generous."

I wouldn't be surprised if, despite the large-sounding acquisition sum of ~5b, many employees are getting their equity zero'd out and replaced with a back-loaded 4 year grant, with vesting starting today and no credit for time already worked.

Re: Capital One to acquire Brex for $5.15B

#314

Post by neilv »

lotsofpulp wrote: post #259
neilv wrote: post #222

Earlier quoted context omitted.

> Typically just enough goes towards the share purchase to make investors happy, and the rest is structured as incentives for founders and key execs with milestone payouts. So they're getting the employees' shares without compensating the employees? And there's incentives paid to the people who approved the deal, separate from their shares? (I've heard of liquidation preferences, but never by the person making a job…

Because “shares” are not all the same. Preferred vs common, so unless you negotiated some kind of preferred share terms, assume your shares are worthless. For a non publicly listed company. For a publicly listed company, the details are all publicly available, so the different types of shares will have their different prices be easily available to see.

If that's true, when a startup is making you an offer for ISOs of common shares, and explaining it... how likely are they to know that, in event of a successful exit for the startup, your shares would be diluted and preferenced to 0 value?

(The two most recent offer equity components I accepted were "2%" and "a million shares". On the latter, an upper exec did a kind of deal-closer meeting for their offer, showing me a spreadsheet, estimating how much the options would be worth if there were an exit in X years at $Y valuation.)

Re: Capital One to acquire Brex for $5.15B

#315

Post by seattle_spring »

SilverElfin wrote: post #219
pastel8739 wrote: post #199

Earlier quoted context omitted.

You can exercise the options before that time is up, paying the strike price to convert them to shares

But then you’re potentially stuck with worthless options you can never trade, right? Seems very unfriendly to employees

> Seems very unfriendly to employees

Ding ding ding ding ding!

Most ICs figure this out sooner or later. Unfortunately many only discover it after being screwed hard financially.

Re: Capital One to acquire Brex for $5.15B

#316

Post by seattle_spring »

manquer wrote: post #64
rvz wrote: post #17

Earlier quoted context omitted.

That is a 50% discount, which isn't great for those who got into the latest round. Seems like Capital One is very excited on the deal and announced it earlier while Brex hid the announcement and made it hard to find. (It's on the Brex [0] journal directory, but you cannot see it featured on its front page) What (really) happened? [0] https://www.brex.com/journal

> 50% discount There are liquidity preferences, nobody took a haircut, they may not made a lot of money as long as the sale price($5.1B) is greater than funds raised($1.2B) everyone made some money not as much as they thought, but nevertheless some. The reason may be different than you think, Capital One is known for its aggressive marketing campaigns and physical mail spam, it is more likely they didn't want to upse…

> as the sale price($5.1B) is greater than funds raised($1.2B) everyone made some money

Absolutely not true. It means someone made money, but it very much does not mean that "everyone" made some money.

In deals like this, common stock often is valued at $0, and employees are instead given a 4-year grant of RSUs in the new company. In other words, their time at Brex was worthless, and they have to last 4 years to get anything. The schedule is often back loaded (eg $0 in the first 2 years, 50% at year 3 and 4). Since most folks won't make it to 3 years, the company knows they won't be paying out almost any of these grants.

Re: Capital One to acquire Brex for $5.15B

#318

Post by krrishd »

okhobb wrote: post #263
another_twist wrote: post #233

Earlier quoted context omitted.

Distribution is king. Kudos to Ramp for that. My weird thesis is that for whatever reason Ruby on Rails shops just seem to survive more. I wonder if someone did a stack specific survival rate analysis.

Pretty sure Ramp uses Elixir.

Ramp is (mostly) a Flask monolith with some sprinkles of Elixir at the very edges where sub-second performance matters.

Re: Capital One to acquire Brex for $5.15B

#319

Post by moomoo11 »

piyh wrote: post #303
moomoo11 wrote: post #94

so are the founders and employees fucked? wasn't this company valued at like 12b?

comparison is the thief of joy

That makes no sense here.

I’m wondering if founders and employees will lose out on any upside.

Considering the payouts will go to them after the investors.

Re: Capital One to acquire Brex for $5.15B

#320

Post by verdverm »

desireco42 wrote: post #169
mise_en_place wrote: post #149

Earlier quoted context omitted.

I'd recommend US Bank.

I am with US Bank for 20 yrs... they will not do dark stuff Chase does, but they are really not competitive. I don't want to change them because others are not significantly better.

I'm leaving Chase because of the Dark Patterns they employ.

1. halving the interest every time my CD renews, "it's the market...", no -2% is not market fluctuation

2. they force you to go to an office to cancel renewal

3. I did this and told them if they did it again, I was leaving them. Guess what they did the first opportunity they got...

4. Their tech is trash too

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