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Brex, the business banking startup valued by venture capitalists at $12.3 billion, is exiting the small business market, Ryan has confirmed.

Why it matters: Corporate card and expense management was once a high-flying part of fintech, but they're not immune to the macroeconomic slowdown.

Driving the news: Brex sent an email to several SMB customers on Thursday, alerting them that their accounts would be closed in two months due to "a change in how we determine account eligibility."

The company said customers would need to close their accounts, withdraw any funds, and provide updated bank instructions to vendors and other payment recipients before Aug. 15. After that date, they will lose account access.

It also suggested they redeem any available rewards points prior to their account closure.

Flashback: In April, Brex detailed a new suite of tools for larger customers called Brex Empower, launching with DoorDash as its first enterprise client.

The new product moved Brex away from a revenue stream built off debit interchange and toward a more predictable SaaS business model.

What they're saying: When asked for comment, Brex chief communications officer Karen Tillman sent the following statement:

"Back in April we launched Empower, and we are now putting the full weight of Brex towards building the best global payments platform for tech startups and larger companies. 

"With this focus, we realized we couldn't do a great job serving the small business community at the same time. This has been an incredibly difficult decision for the team and the founders, but we believe small businesses deserve a partner that is entirely focused on them.

"We know how changes in financial services can be disruptive — especially in a moment like now. We're doing all we can, and working with other financial service providers to make this transition as smooth as possible."

1 big thing: A small business Brex-it

Swedish buy-now-pay-later company Klarna is reportedly seeking to raise funding at a fraction of its prior valuation as investors sour on consumer-facing lending startups, Lucinda writes.

Why it's the BFD: It is, so far, one of the most dramatic examples of a fintech coming back to reality after last year's venture capital frenzy. Last valued at $45.6 billion, Klarna is now reportedly seeking to raise at a $15 billion valuation, per the Wall Street Journal.

Why it's the BFD 2.0: This is possibly bad news not just for Klarna, but for a whole host of investors who bought into the company at far higher prices than $15 billion.

SoftBank — which is already dealing with losses throughout its Vision Fund — led the company's last round of funding, valuing it at the aforementioned $45.6 billion.

Context: Citing sources, the Journal reports that Klarna is in talks about a deal that could raise $500 million after failing to find investors willing to buy in at a $30 billion valuation. 

This all comes after Klarna posted revenue of $1.6 billion for last year, up 38% from the year prior and a loss of about $694.8 million.

What they're saying: "The story is pure speculation and we do not comment on fundraising or valuation speculation," a Klarna spokesperson wrote in an emailed statement.

2. The BFD: Klarna slashes expectations ... again

Illustration of a plastic "thank you bag" that instead reads "IOU" repeated

Latitude Financial, a lending and insurance startup in Australia, agreed to terminate its A$335 million deal to buy Humm Group's buy-now-pay-later business, Lucinda writes.

Why it matters: The broken tie-up won't be the only example of a deal done in better market conditions that ended up doomed.

Background: Latitude offered to buy Humm's unit in mostly stock back in January. But that was when shares of Latitude and Humm were trading about 30% and 51% higher, respectively.

Still, Humm's board urged shareholders to take the deal. Humm's business swung to unprofitable in recent months, per the Australian Financial Review. 

Of note: Investors have soured on lending businesses in particular, including "buy now, pay later" players. Many worry that, after reaching sky-high valuations last year, lending companies may not be able to live up to the hype in a rising interest rates environment.

Our thought bubble: In today's market, BNPL is looking more like it stands for buy-not-pray-lots.

3. A new meaning for BNPL

Illustration of piggy bank as a skull and crossbones

After layoffs, crypto startups face a ‘crucible moment’ (Wired)

The conversation around crypto companies has changed abruptly in the past year. In 2021, they were the darling of venture capitalists, who showered them with billions of dollars to fund aggressive growth.

But now that celebrities like Matt Damon and Tom Brady have brought more people onto crypto platforms, it will be harder for them to sustain growth. That could turn this crypto winter into something closer to a crypto ice age.

State securities regulators investigating Celsius accounts freeze (Reuters)

State securities regulators in Alabama, Kentucky, New Jersey, Texas and Washington are among the states investigating the crypto lender.

Huobi shutters Thailand business (Decrypt)

Thailand's SEC revoked Huobi's operating license in the nation. Now the company plans to close it down on July 1.

China's central bank accepts Ant's application for financial holding company (Reuters)

The People's Bank of China's (PBOC) expects approval of the plan is the latest sign that Ant is poised to emerge from a regulatory crackdown.

4. Credit score

Illustration of a Scrabble board with letter tiles spelling "credit."

• Vendr, a Boston-based Saas-buying company, raised $150m in Series B funding. Softbank Vision Fund 2 led and was joined by Craft Ventures. www.vendr.com

• Able, a commercial loan processing platform, raised $20m led by Canapi Ventures, with participation also from Human Capital. http://axios.link/QnTB

• Mono, a Colombia-focused startup business account provider, raised $6m in seed funding. Tiger Global led. http://axios.link/r965

• zCloak Network, which provides zero-knowledge proofs for public blockchains, raised $5.8m from Coinbase Ventures, Bixin Ventures, Matrixport Ventures, DFG, Sancus Ventures, KuCoin Ventures, Sanctor Capital, Hash Global and Jump Capital. http://axios.link/I86V

• Mewt, a Bangalore-based Super App for SMEs, raised a $4.8m seed round led by Quona Capital, with participation from Beenext, DG Daiwa Ventures, Goodwater Capital and Allin Capital. mewt.in

• Global crypto exchange FTX has agreed to acquire Bitvo, a Calgary-based exchange regulated by all 13 provincial and territorial securities commissions across Canada. http://axios.link/zyrq

5. Deals of the day

• Jimmy Nguyen, founding president of the Bitcoin Association, will be stepping down in September. http://axios.link/Xlre

6. It's personnel

"Never ask:  a defi protocol how their yields are sustainable"

Screenshot of Nick Pappageorge's Twitter account 

7. Memes and mumbles

Happy Friday, Fintech Deals readers. We made it!

Situational awareness: Ryan, Lucinda, and the rest of the Axios Pro team will be off on Monday in observance of the Juneteenth holiday. We'll be back in your inbox Tuesday morning.

Tell your fintech friends, family, crypto pals, and others about this newsletter. They can sign up here.

June 17, 2022

1 big thing: A small business Brex-it