Capitol One statement: https://investor.capitalone.com/news-releases/news-release-d...
Brex statement: https://www.brex.com/journal/brex-and-capital-one-join-force...
At the time we had signed a large enterprise agreement not long before that, and we even were advertised as a enterprise customer testimonial. When we mentioned that he said it was final. They ghosted us apparently and from what i heard a bunch of companies were the same somehow no longer acceptable for their services. I had a friend who worked for a very large F500 company who also got a similar treatment.
Ironically i had a friend a tiny crypto startup that somehow was allowed to stay despite not meeting their requirements.
This was made a bit more annoying when they lost their magical single operating cash sweep account and forced you to split to a separate Treasury account in order to earn interest. Even with auto balance shifting rules, I've had a few transactions fail because of bad timing. (And ACH is scheduled at the same time an intra-bank transfer is scheduled, but the ACH processes overnight and intra-bank has to wait until market open.) Super obnoxious.
Or having to double login to Brex to first do a transfer from treasury and then wait hours to then login and schedule the ACH.
Anyways will never use Brex again after all that annoyance.
nek minute - focus on Enterprise, dawg eat dawg :)
Another good thing about Mercury is that in case you’re stuck/not being treated fairly, you can just email/publicly mention Immad (CEO) and he’ll reply within minutes and will look into this
If you can't provide a billion dollars worth of value, extract a billion dollars worth of grift!
I hear A16Z is hiring.
But all employees after 2021 are underwater. I wonder if they got any relief from management or if they got screwed.
I know individual investors get pretty crazy for blockchain, but I don't recall any major companies doing big investments.
At most, I was asked about it briefly, explained what the usecases were, and it never came up again.
But honestly, it’s still one of the biggest fintech deals ever and actually gives people real money in a market where most unicorns are just stuck. The founders are reportedly splitting about $1 billion each, early investors (2017-2018) are getting 12-80x returns, and YC’s tiny $120k seed turned into ~$100 million (800x, insane TBH). Even later folks (especially the 2021-2022 crowd) are breaking even (at least) or getting a little upside thanks to some 2024 RSU top-ups.
To keep people from jumping ship and to make things feel fairer, IIRC in 2024 Brex did some RSU "top-ups" - basically, they handed out extra shares at the much lower current valuation to compensate for the drop and give those folks a better shot at actually making some real money or "breaking even".
Let's talk about “Liquidation preference”.
Means investors get paid before founders during an exit.
The basic math: investors get their money back first, then everyone else splits what’s left.
Usually 1 times.
Sometimes 2 times or 3 times.
Occasionally, “participating preferred”... get money back PLUS percentage of remaining proceeds.
This means founders can build a $100 million company and get nothing when it’s acquired if venture capitalists structured it right.
Here’s how it works in a typical acquihire:
The startup raised $10 million. Gets “acquired” for $15 million. Sounds like a win.
The liquidation waterfall:
Venture capitalists get their liquidation preference first: $10 million.
Legal fees and transaction costs: $2 million.
Retention bonuses for engineers: $2.5 million.
Founder compensation: $500,000 vesting over 3 years.
Early employees who built everything: $0.
The $15 million exit becomes:
Investors made whole.
Lawyers paid.
The acquirer got talent locked for 4 years.
The founder got $500K spread over 3 years.
Employees got nothing.
In a real exit, liquidation preferences get worse with multiple rounds.
Series A investors: 1 times preference on $5 million.
Series B investors: 1.5 times preference on $15 million.
Series C investors: 2 times participating preferred on $40 million.
The company sells for $100 million.
Series C gets $80 million for their preference. Plus 30% of the remaining $20 million. Total: $86 million.
Series B wants $22.5 million. But only $14 million remains after Series C.
Series A gets $0.
Founders get $0.
Employees get $0.
The company sold for $100 million.
Late investors took it all.
That’s liquidation preferences.
The structure venture capitalists use to ensure they extract regardless of the outcome.
Build a $50 million company?
Liquidation preferences eat it.
Build a $100 million company?
Liquidation preferences eat it.
Build a $500 million company?
Finally, maybe founders see something.
But most companies never reach $500 million.
So most founders never see anything.
The preference isn’t protection.
It’s extraction by design.
Real-world example: Brex.
On January 22, 2026, Capital One announced the acquisition of Brex for $5.15 billion.
Brex was last valued at $12.3 billion in 2022.
58% down round.
$7.15 billion vanished.
But the real damage happens in distribution.
Brex raised hundreds of millions across multiple rounds.
Late-stage investors who invested at the peak $12.3 billion valuation have senior liquidation preferences.
The waterfall likely looks like:
Series D/E investors: 1 to 2 times preference on $300+ million.
Series C investors: 1 times preference on prior rounds.
Series A/B investors: 1 times preference on early rounds.
Total preferences could easily exceed $3 to 4 billion.
Leaving $1 to 2 billion for common stockholders.
Founders and employees hold common stock.
After 8 years building a company “worth” $12.3 billion that sold for $5.15 billion, the founders might walk away with a fraction of what they expected.
Or nothing at all.
Meanwhile:
Pedro Franceschi, co-founder and CEO, gets to keep working... for Capital One now.
Venture capitalists get their preferences paid.
Capital One gets the business.
Build a $12 billion company. Sell for $5 billion. Watch preferences eat everything.
The founders who built it get whatever’s left after investors take their cut.
That’s liquidation preferences in the real world.
Not hypothetical.
Happening right now.
But wait...
Won’t founder Pedro be fine?
Probably better than employees, yes.
Here’s the extraction hierarchy:
Capital One negotiates a management retention pool.
Pedro gets carved out before liquidation preferences hit.
Part of his payout comes as a retention bonus, not equity distribution.
He likely sold shares during secondary markets at peak valuation.
Translation: Pedro probably walks away with low 8-figures plus a retention package.
Not zero.
But nowhere near “co-founder of $12 billion company” money.
Who gets destroyed:
Early employees with common stock options: $0.
Mid-stage employees who joined at $5 to 8 billion valuation: $0.
Late employees who joined at $12.3 billion valuation: negative. Underwater options.
Engineers who turned down Google... $300K salary plus $500K stock.
For Brex... $180K plus equity “worth millions”.
Just lost everything.
The real extraction:
Pedro built an independent fintech company.
Raised billions.
Hired hundreds.
Served thousands of customers.
Now he’s a Capital One employee for the next 3 to 5 years.
Can’t leave. Retention package clawback.
Can’t compete. Non-compete clause.
Can’t build independently. Golden handcuffs locked.
He traded “founder of Brex” for “division president at Capital One.”
The money he gets is real. The freedom he loses is worth more.
The pyramid:
Top: Late-stage investors. Get preferences, exit clean.
Middle: Founder/CEO. Gets some payout, loses independence.
Bottom: Employees. Get nothing, lose jobs, or become Capital One workers.
Liquidation preferences don’t just determine money.
They determine who keeps their freedom.
Investors: always free to move to the next deal.
Founder: locked into the acquirer for years.
Employees: lucky to have a job offer.
Pedro won’t starve.
But he’s not independent anymore.
That’s the extraction that doesn’t show up in the press release.
Brex last raised $300M in Oct 2021 at a $12.3B valuation.
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 people don't realize is the headline number can get severely inflated IF debt is included in the purchase price. If say their book was 4.3B in debt then the equity part is ~800m and all of a sudden everyone's underwater.
We simply don't know the details.
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.
Both guaranteed payout and multiplier are forms lowering your specific allocation of the evaluation so you get a larger payout vs the rest of that group or future groups.
Unfortunately for the majority of people, there are effectively zero good outcomes from any of this. Just like none of the previous promises and assurances of how {insert technology} would make things better for everyone, while always turning out to only benefit a few; so will the current lies of the same pattern result in the same output.
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?
I think this is a pretty decent outcome for Brex. I read they received a total of 1.3 billion in funding, so a 5.15 billion exit isn't bad, especially since the bottom dropped out of the market for so many fintechs that were founded and had big raises between 2015 and 2021.
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 upset the customers and end users on what Capital One will mean
It is quite likely Capitial one will mine the data, monetize the brand, sell other products and target high value users the typical Brex user.
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.
How much you use social media, and are a Brex customer, is going to influence how big you think that group of people is, but it's for sure, non-zero.
hence few fare well in the public markets or when its time for acquisition
It's just another case of the principal/agent problem and normalized white-collar fraud in US tech.
So that number should be even closer to 12…
Not saying they did well, but depending on the 409a valuations, they still might have made money.
Edit: friends, if you’re going to downvote please leave a comment as to why. It’s okay to disagree! There’s a lot of misleading FUD in these discussions about equity. It’s helpful for everyone to hear those sides.
If they really only raised $1.7b, per Crunchbase, then this seems to me like a very good outcome for everyone involved except its late stage investors. And, even for the late stage investors, they're breaking even.
It sounds like investors got out okay, but employees got fucked big time. It's a terrible exit and Brex waited too long until their growth stalled.
The order of operations is not "everyone breaks even, then we start distributing profit".
The order of operations is "people with preferred stock (i.e. investors) get all their profit, and then employees get whatever's left over".
The fact that the amount of investment money put in is less than the sale price is meaningless. If you are an employee with options at a strike price of $5, and the common stock price is now $2, you're screwed.
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 their options will be worthless, if they had options.
Considering the 12bn round was back in 21, I'd expect most of the employee base to be taking a haircut on the value of their options.
Capital One is paying a fair price for the customer base and infra imho to add to their business customer portfolio.
Congrats to Brex et el on their incredible journey.
Capital One got a nice discount.
Brex killed a ton of their customer relationships to "refocus" on larger biz. That created a lot of negative sentiment for the brand.
> All Ramp did was spend more on ads and marketing
That's distribution. It matters.
Ramp has a much more synonymous name, better recognition, and less bad reputation.
I know people with terrible credit may have problems getting a credit card, and others may have trouble not treating a credit line as spendable beyond their means, but everyone else should keep the 'debit card' at home or at least confined to their wallet.
But also, they're looking at moving their credit cards to Discover as well, which would make huge waves (both in the credit card/banking world, and for their customers, who would probably find it very annoying).
This could be not that hard to pull off. American Express historically was less accepted because of their high fees, but I don't think Discover has or had that problem.
That doesn't sound good.
This isn't a value judgment on people who do use credit cards. There are plenty of reasons why using a credit card by default would be appropriate, and I'm not shocked to hear of someone who does so. But I am curious where your shock comes from, so I shared my story as a data point.
Despite the name, many people use "credit cards" simply for rewards and enhanced purchase protections, with only incidental use of the credit facility.
In the US market, it is surprising that someone would choose to use a debit card over a credit card (if they have the choice) because they are giving up the rewards and enhanced purchase protections, which are available at effectively zero cost.
If I used a debit card over a credit card, I'd effectively be paying ~2% more for most things I buy, for no benefit.
Using a debit card, in the event of fraudulent charges, the money is already gone from your bank account and now you are negotiating with your bank to get it back. With a credit card, you file the claim and its generally resolved before your statement closes and anything is due. Your card will also be immediately cancelled, so if its your debit card you will lose ATM access while awaiting the new card.
This will happen to you many times over the course of your lifetime, maybe every 5-10 years. Usually when a number is stolen, they speed run getting as many $1000s of charges in before the card is stopped, which would drain your debit card account.
Credit history is also important. If you don’t have a credit card and build basic credit history before your first job, you will have trouble signing a lease without a parental guarantor.
They make money off people who pay interest so I just take advantage of that.
People who like to tell other people they shouldn't use debit cards often cite fears of fraud, but that's really never been a problem for me.
So there is actually no good reason to use debit cards. I say this as a former user. Makes no sense at all once you think everything through.
https://web.archive.org/web/20190827190311/https://www.wsj.c...
Mavis Beacon Approved
> Brex is a financial technology company, not a bank. The Brex business account consists of Checking, a commercial checking account provided by Column N.A., Member FDIC, and Treasury and Vault, cash management services provided by Brex Treasury LLC, Member FINRA/SIPC.
Do you know how many businesses move money on Stripe rails? It's wild.
Every time a customer in the EU pays with Stripe, they exactly know if they are a private customer or not and in which country that customer is located in. Stripe also knows who the counterparty is ("their merchant").
Yet Stripe systematically enabled their merchants to avoid paying appropriate VAT for sales to private customers in the EU. The merchants would send you a "receipt" and then go dark, no proper invoice provided and no appropriate VAT payments to the EU made.
Their merchants could write fantasy names on the invoices, Stripe would not check or correct anything. They simply ignored the whole Mini-One-Stop-Shop in terms of VAT.
That's the "benefit" of using Stripe, they had very happy merchants who didn't need to pay taxes when selling digital products to EU customers.
I had to light a very big fire under their ass for them to provide proper invoices. I have zero indication they systematically remediated the tax fraud situation and actually paid the EU the VAT that Stripe merchants owe if you'd look into Stripe's accounting.
And Stripe is OBLIGATED to tell me at least who is the damn COUNTERPARTY to my transaction. Company name, company registration number, company country of residence. Ideally with address. And - wow - now we have everything to actually legally follow up with the merchant to get a proper invoice from them.
But Stripe is actively obscuring this information, and making it hard for users to find out. Many of the Stripe merchants don't even have an imprint on their website.
You ask why they hide the information? Because otherwise it would be clear even to ignorant people like you that in fact a VAT needs to be paid on that transaction.
The obligation has always been on the company making the sale not the processor.
You tell me. Would the same people who help evade tax payments in the EU really do the same in the US? That's unbelievable! /s
> The obligation has always been on the company making the sale not the processor.
That's incorrect. At minimum, the processor needs to tell me exactly who the money goes to, so I can reach out to them.
And that's a "legal reach out" kind of information including company name, company type, company registration number, and company country of incorporation.
Stripe makes it easy for merchants to obscure that information and is actively hiding it from the customers who paid the merchant.
https://money.usnews.com/credit-cards/articles/biggest-us-cr...
This list counts Discover separately, but Discover is owned by CapitalOne now.
Chase got it instead, but they are losing it next month because of their shenanigans and greed
Wish crypto hadn't been co-opted by the same people and worse
Well, on a related note: https://oag.ca.gov/news/press-releases/attorney-general-bont...
"Capital One marketed its 360 Savings accounts as “high interest” accounts with “one of the nation’s best savings rates”...However, while interest rates rose nationwide...Capital One kept the interest rates for its 360 Savings accounts artificially low...Instead, Capital One created “360 Performance Savings,” a nearly identical type of savings account that provided much higher interest rates than 360 Savings..."
“Capital One misled consumers through false marketing and a lack of transparency regarding its savings account system, cheating consumers nationwide. Given an opportunity to make loyal customers whole, Capital One sank their teeth in even more, attempting to underpay people it harmed and continue its deceptive practices"
Now I have a good job, and have been fortunate, but I don't live in a tech hub or am I surrounded by other high earners.
It struck me in that moment that these banks offer high convenience to people who never really have ever had true savings. The interest rate is largely meaningless when your account is chronically in the $250 to $1250 range. Things like app integration, and easy user friendly deposits and withdrawals are much more important.
I think if you are someone who financially made your way to a place where interest payments are meaningful in size, you probably left those "convenience" banks a long time ago. The thought has made me more mindful about my bank rants now.
Unless you really think you might need the money immediately, chances are that keeping your money in a brokerage account and using a money market fund (say, VMFXX or something like that) will lead to less headaches with rate manipulation, as the funds aren't playing games with the general public.
It's not a bank account so you will still need a backup checking account if you need Zelle or similar, and it has no way to deposit cash - but the CMA has direct deposit, ACH transfer, debit card access, and check writing, so 95% of the time it does all you need.
The new qualifications to be a Brex customer at that time were:
> Received an equity investment of any amount (accelerator, angel, VC or web3 token);
> More than $1 million a year in revenue;
> More than 50 employees;
> More than $500k in cash;
> Tech startups who are on a path to meeting the criteria above, and are referred by an existing customer or partner.
(in the industry, but not at a startup)
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
Of course, the VCs take a cut, but overall the redistribution seems net positive to me.
https://www.msn.com/en-gb/money/other/capital-one-strikes-5-...
Text-only:
https://assets.msn.com/content/view/v2/Detail/en-in/AA1ULTnJ...
Maybe just pull a Bending Spoons after the acquisition, layoff most of the staff, and bring a lot of ops in-house and they'll be in profit ASAP.