Here's why Brex just paid $90M for 10-person software startup Pry Financials
In line with its April 13 announcement that it’s making a “big push” into software, Brex has acquired Y Combinator-backed Pry Financials for $90 million, the company told TechCrunch exclusively.
Founded in 2019, San Francisco-based financial planning software startup Pry raised $4.2 million in venture funding last year in a seed round of funding. Investors include Y Combinator, Global Founders Capital and Pioneer Fund, among others. The company’s software targets seed to Series B companies.
Originally, Brex was a startup focused on startups. Specifically, it provided corporate cards aimed mainly at startups and SMBs. Over time, Brex has gradually evolved its model with the aim of serving as a “financial operating system” for companies of all sizes.
Its acquisition of Pry is not only reflective of Brex’s new emphasis on offering strong software products, but also its continued commitment to early-stage startups -- the demographic which was the company’s target customer in its own early days. Today, Brex says it still has “tens of thousands” of customers that are startups.
Brex CEO and co-founder Henrique Dubugras says Pry’s software gives founders the ability to directly connect their company’s bank accounts or integrate with QuickBooks or Xero to “immediately get an overview of their startups' cash flow, burn rate and runway, track critical financial metrics, create a forward-looking financial plan and model different future outcomes.”
Neither company would share Pry’s hard revenue figures, and the startup said only that it’s been growing by about 30% month-over-month since its public launch in early March 2021.
Paying $90 million for a 10-person company that has raised just over $4 million over its lifetime represents a bold move for Brex, and a great outcome for Pry’s founders and investors. It also marks the fintech’s largest acquisition to date. Brex has made a total of nine acquisitions, but the majority were acqui-hires. Its purchase of Pry, and last year’s $50 million buy of Israel startup Weav, were more aimed at acquiring the company’s technology and products.
Dubugras told TechCrunch he got in touch with the company after it participated in Y Combinator’s Winter 2021 cohort. But what really pushed the fintech to scoop up the company was the overwhelming endorsement of the startups on its customer advisory board. Eight out of 10 founders on that board shared that they used Pry’s software and that it was “amazing.”
“Pry’s software makes it incredibly easy for a founder to plan ahead and understand their business better, how their cash flows are going to change,” Dubugras told TechCrunch. “It’s an Excel-like product to connect all their data and to build a model and budget, which is also super helpful for investors.”
Dubugras said that Brex valued the startup less on its own metrics and more on the value it believed it could generate for Brex by cross-selling into its existing customer base.
“We have 160 common customers already, and it hasn’t even done a lot of go-to-market or selling,” he added. “It was a strong product market fit.”
All 10 employees have been folded into Brex.
Andy Su, Pry’s co-founder and CEO, recalls when Dubugras approached him after seeing his company present at YC Demo Day.
“He reached out and we had a one-on-one back in May. He told me that he really loves what Pry is doing and thinks it could do really well within Brex,” Su recalls. “And I thought he was just being nice, you know? And just being encouraging to another fellow founder. But it turns out, he really meant it.”
In its early days, Pry was selling primarily into YC companies, according to Su. But as the company has grown, YC companies now make up about 30% of its customers.
In Su’s view, what makes Pry’s software stand out is “the completeness of the tool.”
“There are a lot of point solutions,” he told TechCrunch. “But ours is one of the first that has a budgeting piece, modeling plan and hiring tool in one platform so founders can move off of their Excel spreadsheets.”
Su had hoped for an exit such as this one day, but “definitely not this early.”
“It’s an exciting outcome for us,” he said.