Brex partners with former competitor Zip, with an eye on reducing cash burn to get to an IPO

Summary

Brex has once again made the surprising, but perhaps realistic, decision to partner with another one-time competitor. This time Zip, the CEOs of both companies told TechCrunch exclusively. In April 2022, fintech Brex announced it was making “a big push” into both the enterprise and software. The news was notable considering that Brex originally was a startup focused on startups. It provided corporate cards aimed mainly at startups and SMBs. Brex gradually evolved its model with the aim of serving as a “financial operating system” for companies. When the company announced that it was branching out into software, its goal was to diversify its revenue streams. So instead of just primarily making money off of interchange fees, it was seeking to also generate recurring revenue from subscriptions to its software. But over the years, it seems that Brex has realized that there are some aspects of serving enterprise customers that it may not have the capabilities to do in the way that it wanted to. And, according to chief business officer Art Levy, the majority of its revenue today still comes from interchange fees (although software is steadily growing, he said). So in what might be a considered surprise move, Brex announced last fall that it was partnering with Navan to offer “BrexPay for Navan,” combining its corporate card with Navan’s travel management in a product aimed at enterprises. Once Navan (formerly called TripActions) expanded from just offering travel services after the COVID pandemic hit into overall expense management, it was increasingly competitive with Brex. So the news that the two were joining forces raised a few eyebrows. And Tuesday, Brex is now announcing another partnership aimed at boosting its offering to the enterprise. It is partnering with Zip, a five-year-old procurement startup that raised $190 million at a $2.2 billion valuation last October, to offer “Brex for Zip,” the two companies shared with TechCrunch exclusively. The new offering embe...