Evaluating Brex offer

Square SQQQQ
Jul 15 18 Comments

Offer from Brex which I am not sure how to evaluate
Product Marketing Manager
TC 250K
YOE 6
You can decide how this is split between cash & ISOs

any recommendations on how to approach the split, if I take the offer? at a $2.6B valuation, I'm not sure who could afford to acquire them, so if there was ever an exit it would likely be an IPO years down the road.

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TOP 18 Comments
  • Credit Karma jebezo
    This is worrying:

    Like many startups raising capital today, Brex wasn’t in need of the cash. Dubugras notes the Series C-2 was more of a “repricing event” than a necessary fundraise.

    “We haven’t touched our money from the Series C yet,” he said. “For us, this round is a repricing event for the company that helps with recruiting.”
    Jul 15 5
    • New / Mgmt
      Microsoft.

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      Very worrying.

      If he boldly states it was for "recruiting" that means they plan to create an inflated valuation for the company where the new hires will be given ISOs that are unrealistic and hence less cash the company needs to release to employees.
      Jul 15
    • Square SQQQQ
      OP
      This doesn’t seem to be true since all new employees get to choose their split between cash base and ISO compensation at the current preferred stock price. You can take as much risk as you want as a new employee
      Jul 16
    • New / Mgmt
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      Yes you are right employees have the option but the devil is in the details. It's a psychology game.

      As an employee who is willing to work at a startup it's very unlikely that you wouldn't pick anything for your ISO.
      So at least new employees would pick between 20% to 50% of the TC as their ISO.

      Therefore the results will be inflated stocks for the company and the less cash that goes out the door.
      Jul 16
    • Square SQQQQ
      OP
      So you suggest taking all cash?
      Jul 16
    • New / Mgmt
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      Well it's tricky.

      Generally speaking, the main driver for those who opt in to work for a startup is to be in a situation in which they can have potentials of gaining through stock options. Otherwise working for any mid-level public company would be a much better choice.

      There are many uncertainties that come with the startups. Which in many cases can be considered as a trade-off when you're giving a whole bunch of ISO with really low valuation.

      None of that seems to be the case here with Brex at the moment.

      The call is yours but from a logical standpoint if you choose to go with this starts up it makes sense to have at least 20 to 50% of your TC as stocks. And then that means that with the valuation that they have you're basically not making an educated guess I'd rather gambling your time and energy.

      And if you choose to get all cash that means basically taking a very high risk because you're putting your career against no potential job sites whereas you can work for any other public company get RS use and still get decent cash without any risk of losing your job in a startup.
      Jul 16
  • Adobe / Mktg etvv78
    You’re basically asking how many Lotto tickets to buy. I’d say 20% sounds reasonable on ISO. Less, why gamble at all. More, seems irresponsible (unless you really don’t need the cash).

    $200k is not horrible TC if your ISOs don’t result in anything. You’ll get good exp and another payment name on your resume. And if ISO do turn liquid, you’ll still have a decent upside. Let’s say 5x. Arbitrary, but not unreasonable.
    Jul 15 3
    • New / Mgmt
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      For the ISO to become 5x the valuation needs to be at least 5x.
      That means 2.5 Billion x 5 = 12.5 Billion

      To me that's very unlikely for Brex.

      What you guys think?
      Jul 15
    • Apple appl3
      Valuation is definitely inflated right now, but doesn’t mean it is very unlikely that it’ll 5x. It has an okay chance imo. If it gains traction then it’ll grow nicely. If banks and other financial institutions copy their work then it won’t experience huge growth (and it’ll most likely fail). There are a lot of variables
      Jul 15
    • Credit Karma jebezo
      The track record of fintechs taking on credit risk and succeeding is quite low. Usually growth is high, valuation goes up, then the losses come.
      Jul 16
  • Apple appl3
    Brex has grown in value so much in such little time that while it does look to have a promising future, many people are saying it is overvalued
    Jul 15 0
  • Oracle pzd
    Value options at $0 and you will arrive at the correct valuation.
    Jul 15 0
  • 👆🏻Brex recruiter
    Aug 8 1
  • Brex WsDJ21
    The company is growing so fast and everyone here is extremely ambitious. I leaned more on the equity side. Personally, I have high confidence in the business.
    Aug 3 1
    • Brex WsDJ21
      But you're right in that it's not likely to have a acquisition. We'll have to wait for a public exit, which I think is still > 4 years away.
      Aug 3
  • Neurocrine gomv61
    Can you provide a breakdown of that TC?
    Jul 15 1
    • Square SQQQQ
      OP
      The breakdown is whatever you want it to be. 90% cash 10% ISOs at current preferred stock price/valuation, 50/50 split, whatever you want
      Jul 16