Brex CEO Henrique Dubugras is raising over a billion dollars a weekend to fund an emergency bridge credit line to help startup clients affected by Silicon Valley Bank’s collapse make payroll next week. Dubugras said he’s on back-to-back calls to secure credit line money, but he wouldn’t know how much.
“We’re working with a lot of lenders this weekend, to basically raise as much money as we can afford,” Dubugras said. 500 applicants have requested salary loans totaling $1.3 billion. The same folks who want $1 billion have $10 billion in SVB deposits.
The creator claims demand rises every five minutes. Dubugras said the final close is “TBD,” but it’s “very likely” they will close some money.
Is the deal good for creators, or will the sharks come out, as one entrepreneur warned me today?
Brex said they’re not making money on these loans but didn’t disclose the terms. “That’s where we’re working through to kind of get the right rate but think about it this way: there’s not a lot of information right now, and coming up with over a billion dollars in a weekend, it’s no easy feat,” Dubugras said. “I think we’re just trying to figure something out that works for everyone and create an option.”
“Onboarding an influx of people is the easiest way to invite fraud and get kicked out of the banking ecosystems,” one founder told TechCrunch yesterday. Dubugras called SVB’s customers “pretty good.”
“Most of the customers that we’re getting are real startups that had real businesses with real deposits,” he said. “We’re verifying that these customers are real customers – that is not my concern.”
I pray the industry doesn’t learn that any bank other than JP Morgan is unsafe. “That will be terrible for our ecosystem and America,” he added. Dubugras suggests creators spread risk. “I think the safest place for your money is not a bank account, it’s a money market fund and a cash management account, so that’s why we do this at Brex.”
While Dubugras focuses on raising and claims Brex is operationally ready and not trying to take advantage of desperate founders, the company must show it can do this.
TechCrunch reports that fintech received billions in payments. SVB closed the wires, and the FDIC took it hours later.
“We’ll fund these loans and our business accounts, and we hope people stay our customers after that.”
Talk about a day I'll remember for the rest of my life
— Henrique Dubugras (@hdubugras) March 11, 2023
Dubugras is not the only tech boss encouraging founder loans. Another CEO is raising funds for an emergency fund for climate-focused startups, while others are seeking funding for historically underrepresented creators.