Brex, a US fintech startup, has cut more than 200 employees from its 1,000-person workforce. This move shows that even a decacorn—a privately held company with a valuation topping $10 billion—isn’t immune to job losses. The startup said it’s doing some restructuring, according to an email sent today (Jan. 23) to an employee who received a layoff notice.
The company, launched in 2007 by Henrique Dubugras and Pedro Franceschi, who both founded and sold a fintech firm in Brazil, offers credit cards to startups; it’s also branched out into other services, such as travel expense management.
Brex counts Y Combinator and Kleiner Perkins, along with PayPal co-founders Max Levchin and Peter Thiel, as investors. The company is valued at $12.4 billion, according to PitchBook.
The job cuts follow an earlier round of layoffs—totaling 11% of the workforce—in late 2022, when the company’s then-CFO joined its competitor Rippling.
It’s not just Brex, though. Well-funded fintech players have been struggling as they adjust to a high-interest rate environment. Last year, Stripe—which plans to go public in 2024—and Plaid reportedly laid off 1,000 and 260 employees, respectively.
“Looking inward, I realized we grew our org too quickly, making it harder to move at the speed we once did,” Brex CEO Pedro Franceschi wrote in a blog post in regards to the job cuts.
Seeking tech talent in Latin America
The layoffs come as Brex focuses on hiring outside the US.
The company, which has offices in San Francisco and New York, has been recruiting in Latin America, Israel, and Canada, with an emphasis on software engineering, according to the employee familiar with the matter.
That’s a reversal of Brex’s previous approach—dangling cash to poach staff from the Google and Metas of the world. For example, the company gave new hires a choice of how much money versus stock they could take. Brex’s job board now shows postings for employees in Brazil, Mexico, and Canada that far outweigh its listings for US-based roles.
Brex is just one of many American tech companies outsourcing talent to lower-cost countries as layoffs keep plaguing the industry. No wonder: The median annual salary for a US software developer is $124, 200, compared to $62, 306 for one in Brazil.
In November, Google revealed that it’s building a data center in Uruguay, the tech giant’s second such facility in Latin America; the other is located in Chile. Google also announced in 2022 that it would hire 200 engineers in Brazil, part of a plan to bolster privacy, security, and technologies that combat abusive content.
Brex is unprofitable, losing $16 million a month, the employee said.