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Now that you’ve hit the “share” button, on to this week’s topic.

Last week, VC hearts were aflutter with the news that Capital One would be acquiring fintech darling Brex for an eye-watering $5.15 billion.

The headlines screamed "massive win." The LinkedIn posts radiated congratulations. The group chats buzzed with speculation about who made bank. Investors rushed to update their portfolio pages with the shiny new exit multiple.

But here's what nobody's talking about in those carefully crafted congratulations posts: the math doesn't actually work out the way everyone's pretending it does.

As the resident contrarian, I couldn't help but have thoughts. So here are my 3 hot takes that nobody else seems willing to say out loud.

1️⃣ If you joined Brex in the last 5 years, you’re probably SOL.

The last priced round was in 2022 at a post-money valuation of $12.5 billion. The round was led by Greenoaks and TCV.

In that context, $5.15 billion isn't just a down round—it's a 60% haircut.

Here's how the math actually works when liquidation preferences kick in: investors with preference stack (which is basically everyone post-Series C) get their money back first. In many cases, they get multiples of their money back first.

So that $5.15 billion? After the preference stack clears, there might only be $1-2 billion left for common shareholders. And if you joined after 2020 when the valuation was already sky-high, your strike price on those options is probably underwater or barely above water.

Those RSUs you were promised? The ones that looked amazing on paper when the company was worth $12.5B? They're probably worth a fraction of what you thought - if anything at all.

The early employees and the 2017-2019 cohort will do fine. The founders will do more than fine. The later-stage investors who negotiated 2x liquidation preferences will do just fine too.

Everyone else is learning an expensive lesson about how cap tables actually work when the exit price comes in below the last valuation. Welcome to the preference stack, population: not you.

2️⃣ This is a glaring red flag for the IPO market, and nobody wants to admit it.

Here's the question nobody's asking: how many $5 billion acquisitions of payments platforms can Capital One realistically make?

The answer is one. Maybe two if they're feeling ambitious and regulators are asleep (and honestly, given this administration, seems more likely than not).

For the hundreds of late-stage fintech companies sitting in the waiting room - the Stripes (if they ever wanted to exit), the next generation of "we're going to IPO eventually" unicorns - the math just got significantly worse.

If Brex -with its blue-chip customer base, legitimate product-market fit, strong unit economics, and actual revenue in the hundreds of millions - had to sell at a 60% discount to its last valuation, what does that say about everyone else?

What does it say about the companies with weaker margins? Slower growth? Less defensible moats?

The IPO window has been "opening soon" for three years now. The SPAC boom and bust came and went. Direct listings turned out to be a solution in search of a problem. And now even the golden child M&A exits are coming in at steep discounts.

For investors seeking liquidity and employees banking on a payday, the answer remains the same: wait. And hope. And maybe start updating your LinkedIn because that equity package isn't going to pay your mortgage.

3️⃣ Corporate cards were never going to be a $12 billion business, and we all pretended otherwise.

Let's be brutally honest about something the fintech echo chamber doesn't want to admit: Brex built a better mousetrap, but at the end of the day, it's still just a mousetrap.

Corporate cards are table stakes, not transformation. The switching costs are low: IT can swap providers in a quarter. The margins are thin: interchange rates are what they are. The competitive moat is barely a puddle - any bank with a tech team can replicate the core product in 18 months.

Chase can build this. Bank of America can build this. Stripe can bundle this. Ramp can outspend you on customer acquisition until you bleed out.

And here's the uncomfortable part: the market knew this in 2019. But nobody wanted to say it out loud because we were all too busy celebrating "disruption" and "fintech innovation" and "the future of B2B payments."

The real lesson here isn't that Brex failed - they didn't. They built a real business with real customers, real revenue, and real value. The founders should be proud. The early team should be celebrating.

But the $12.5 billion valuation was always fantasy. It was a number that made sense in a zero-interest-rate, growth-at-all-costs, "software is eating the world and fintech is eating software" fever dream. It was never tethered to the actual economics of what corporate card infrastructure is worth.

$5 billion is probably closer to reality than $12 billion ever was. And that's not a criticism of Brex. It's an indictment of how badly we collectively mispriced an entire generation of fintech companies.

So what does this all mean?

The Brex acquisition is being celebrated as a win because the alternative - admitting that late-stage fintech is structurally overvalued and the exit environment is broken - is too painful for anyone with skin in the game to say out loud.

But if you're a founder raising your Series C, an employee weighing a job offer with heavy equity comp, or an investor writing checks into late-stage rounds, you should be paying very close attention.

The Brex exit isn't an outlier. It's not bad luck or bad timing.

It might just be the new normal.

🎧 This week's episode Money Memories with Jeff Hurst airs Wednesday. As a resident fangirl of the platform, I'm really excited for this one. We're diving into how temporary housing is reshaping where people can afford to work, the economics of travel nursing and contract labor, and why solving the housing side of workforce mobility might be more important than we think.
👉🏽 Listen on NPR, Apple, Spotify, or wherever you listen to podcasts

Ask: I am still looking for a great place to record Money Memories in person in Long Beach! Please reach out if you have any leads.

✍🏽 I also have so much exciting coverage on Forbes this week: featuring the founder of Jelou and the state of WhatsApp in LatAm, plus other exciting funding rounds you won't want to miss.

📌This NFL Season’s Fiercest Rivalry Is Sports Betting vs. Prediction Markets

📌Who was Alex Pretti, the intensive care nurse shot dead in Minneapolis?

If you find this valuable, here are a few ways to support Bear and the Bull (most of which are free):

Till next week,
Ilona

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