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.
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.
This is called value creation.
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.
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.
Early employees' options will have value, but more recent options are likely underwater.
I've never bothered to understand the details since none of the private companies I've worked for have had the non-cash portion of their comp be worth anything but $0 before.
If you‘re just a regular employee with some options, and the acquirer doesn‘t want to keep you on, you should expect nothing.
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 offer with stock options. Bribery also never came up.)
Bitter about VCs? Me? Never.
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.
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.
It's just another case of the principal/agent problem and normalized white-collar fraud in US tech.
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.
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.
All other spending should go onto credit cards, for numerous reasons that have been bought up throughout this thread.
There's nothing wrong with debit cards being used.
If I can shout one thing back up to your rooftop:
Why on earth do your transactions cost 2 or 3 percent. For what? For basically verifying an RFID chip and adding a single entry to a ledger?
Don't say you're getting it back with points or whatever because we all know that the credit card company won't be going broke so that cut is coming from somewhere. And in the end that's always the consumer
Retailers(in the US) typically eat the cost. Some industries(in the US), like gun shops, are up front about charging more for credit card payments. Most companies(in the US) just see it as cost of doing business.
Points have next to nothing to do with why you should always use credit cards(in the US). There are legal consumer protection reasons. The points are just an optional perk.
This is what I really have a problem with. It feels so incomprehensible to me that, assuming you're an adult, you can think this.
It's just a cost, if that cost didn't exist then either the price would be lower or the margin would be higher. In the end you're paying for it. You're the one exchanging money for a good/service.
This is proven by your other comment about how some sectors give you the option. I would rather have that option because those legal protections are useless for the majority of purchases. Good luck disputing that burrito you bought or those groceries. In such transactions you're basically just inviting a company to take a cut for 0 added benefit (aside from points).
Even better, our small town (pop. 100) gas station upgraded their pumps a while back, and they have NFC! Finally my normal fill-up location is skimmer-resistant. Or is it skimmer-proof?
Put a reader with a shield on the pad and a new pad on top and a small terminal in somewhere out of sight. You won't know the difference. Requires infrastructure though so it is a bit more complicated and a lot more noticeable. Likely used the non-pin entry limit which is always reset after you payed a large amount and had to enter your pin. Not like the strip readers of olden days.
Anecdote: We had a "chip charge" system where you put money in your card via a ATM like device and those sometimes had strange "extensions" in front of it which read your chip while you charged it and immediately took the money. People often don't know what too look for when it comes to skimming devices and with tech it may look like a strange but genuine device.
I've had this happen to me twice in about 25 years. Neither bank made me wait weeks.
The most recent one (with a giant megabank) issued a provisional credit in under an hour.
There seem to be a lot of people in this thread who have never actually been through this and are just apeing what other people say online.
U.S. banks largely give debit cards the same protections as credit cards for at least the last 15 years.
Relatedly, the credit card system is truly a tragedy of the commons situation.
It's a ~2% drag on the economy for what? For some silly points with constrained value and an excuse to not build better financial infrastructure.
The frustrating thing is that, given the current equilibrium, you're a sucker for not using a credit card - you end up subsidising those who do.
points are just premiums: some insurance consumers are a greater risk, and so pay more.
any convenience features are built on top of the insurance product: _because_ all players are covered, _therefore_ i can make online purchases. _since_ (i have a justified expectation that) i am not liable for fraudulent use of my account number, _therefore_ i can read it to a customer service rep over the phone.
we can of course debate whether 2% is a good price for this coverage! but there must be some price paid here -- if the insurance broker doesn't collect it, the scammers will. this, after all, is the real tragedy.
So assuming the rest is all the same, you just paid exactly what you would've paid with a debit card. Because the merchant had to raise prices to accommodate the fee. And that's with the credit card company not taking a cut and we all know that's not true.
High tier cards are more expensive to accept, unless your merchant rate is a high enough flat rate that it covers the average and then some.
Yes we'll open a dispute. Yes we'll give you a credit immediately. But then we just take the sellers word for it that they're trying to make it right and charge you anyway.
This is my one singular experience with a dispute but that's with a big bank getting almost all of my transactions over the course of years....
Also, that means the person had the PIN too? That becomes harder to defend
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.
I know this isn't popular in the USA, but when compared to the rest of the western world, consumer debt is off the charts insane in America and it doesn't have to be that way. I've lived on both sides of the pond and I much prefer a society where people buy things that they can afford instead of financing everything on the back of a hope and dream that they will for sure pay off the balance this month.
As for the "but muh security!!" argument that I can hear someone typing, having a credit card for security is a terrible argument. You should be lobbying your politicians to regulate financial institutions to build better systems that are not susceptible to such obvious exploits and fraud. Again, much of the world has solved this problem to the point where I can post my bank account number on my business website and nothing bad ever happens. Customers can wire me money directly without approval and I have to manually approve all outgoing transactions at least once (scheduled transfers are still possible); it's not rocket science!
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.
It wouldn't be quite the same impact spread out over 5 cards paid out of multiple checking accounts with slightly different billing cycles.
This can work amazingly well for some folks. And can be a spiral of debt for others. This is generally good advice if you can and do actually pay off your credit cards every month. This gets quickly out of control as soon as you don't or won't for one reason or another.
I have several cards and don’t keep a balance on any of them. They’re a tool with several uses, and one of mine is to be able to pay for things without exposing my debit card/bank account.
Hence why cash discounts are a thing (and yes they're legal again).
It’s also fundamentally different. There are protections, but they depend on you being aware of the activity to avoid impact. Basically, in the event of fraud with a credit card, Chase or AMEX have a problem. With a debit card you have a problem until the resolve it. In the meantime, your payments and checks may not clear or hit overdraft.
As long as you can control your spending, credit cards are a real superpower for consumers.
It's not a great system but it's what we have so using debit instead of credit does mean losing out.
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.
I have had exactly one encounter with fraud: a vindinctive ex-girlfriend stole my card info and had herself a little shopping spree, emptying my checking account. I walked into the credit union branch, filed a report, and walked out with $300 and a new card. All the stolen money was restored within a few days. It was not a big deal.
There are fee free cards that give cash back as statement credits (AMEX Blue iirc). No limitations on what you can spend it on. The Apple Card does 2% cash back which you can just transfer to your bank account.
The Amazon card requires a Prime membership, but gives 5% back on anything bought at Amazon. I bought my last TV using the 5% back I had received.
Then there are top tier cards like the Chase Sapphire or Cap One Venture X that have yearly fees. But, if you take 1+ trips/year they immediately pay for themselves and more (credit for global entry, yearly statement credit for travel that almost equals the yearly fee, lounge entry, etc...). I routinely use points from the Venture X to cover travel expenses like tickets, rentals, hotels, eating out, etc...
Amazon gives you 5% back for using their credit card, it's criminal not to use it.
If you buy a lot of equipment or expensive equipment - B&H credit card covers sales tax! I.e. 10% for my area! (I don't use it since I don't buy that much, but still it's an option)
I know I could probably min-max this into more by juggling different cards for things like Amazon and Costco but I'm lazy and don't want to think.
For example in New Zealand, EFTPOS cards are very popular (similar to debit cards, but issued directly by our banks so no user fees ever - the merchant pays for the machine and that's it). People usually have all 3 - an EFTPOS card for most in-person purchase (although online EFTPOS is gaining adoption), a debit card for online or paywave-only places, and a credit card for large purchases/ emergencies. Credit cards here are highly unpopular among the under-25 age bracket; most young people just have EFTPOS and debit.
I think this might be a result of our stricter banking regulations compared to economies like the U.S.; it's difficult for banks to offer tempting enough rewards schemes to entice people to credit cards. Additionally, there is much less of a borrowing culture - most people will only ever properly borrow money once - buying a house. Paying cash for cars is the norm, and purchasing anything else on finance is seen as stupid compared to just saving the money (and earning the interest yourself).
As to fraud protection, I agree, but as noted in another reply, I wish I understood why the protections afforded to credit don't also apply to debit. There must be some systemic reason for it that I'm unaware of. As it stands, my best guess is simply that "it's a perk to entice people to use credit".
1. Scammer clones your credit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The funds are actually not given to the store for a bit given that credit transactions take a while to settle. Upon the dispute, the store now needs to prove that you were there and bought those clothes to get their $500, or else the bank/Visa won't pay them.
2. Scammer clones your debit card with a skimmer and pays for $500 of clothes at the mall. You dispute the charges. The store already got paid though. The bank doesn't want to give you another $500 in case you are actually in on the scam, then they'll be out an additional $500. Eventually assuming they can't prove you actually bought the clothes, I think the store would have the $500 confiscated, but usually you're still liable for $50 if you reported it quickly enough, but could be more if you take too long to report the fraud.
Of course debit cards can easily be converted to even easier-to-launder money substitutes, too.
With a debit card, your money is out of your account, immediately, and you have to fight to get it back. For some banks, for some accounts, this isn't a big deal, and you might have it back in a few hours. But for others it might take weeks, and in the meantime you've failed to pay your rent or mortgage.
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.
They make money off people who pay interest so I just take advantage of that.
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.
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.
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.
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.
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.
But all employees after 2021 are underwater. I wonder if they got any relief from management or if they got screwed.
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.
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.
https://web.archive.org/web/20190827190311/https://www.wsj.c...
Capital One got a nice discount.
> 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.
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)
I'm doing a consolidation / rebrand around the verdverm pseudonym this year
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.