If you want to see exactly how, look at their credit card bills. Brex, a corporate card and expense management fintech unicorn, published new data on this today—laying out how their customers, which include 10,000 seed, early-stage, and late-stage startups, were spending through the end of 2022.
Late-stage startups, in particular, are more focused on profitability right now, which means they are pulling back on things like advertising and marketing or travel and entertainment, according to Michael Tannenbaum, who is the CFO and COO of Brex. That being said, travel costs are higher than they were at the beginning of the COVID pandemic when people had effectively stopped going on work trips or hosting work dinners and events altogether.
“Earlier stage companies generally have had flat spending for the past six months, while later stage companies are becoming more conservative, and I think that reflects the funding data,” Tannenbaum says.
During our conversation, Tannenbaum pointed out that consulting and contractor spending has actually gone up, which is indicative of companies re-evaluating their headcount and which full-time roles they really need. Startups also tend to turn to third parties for advice when more pressure is put on the economy, according to Tannenbaum.
Naturally, Tannenbaum and I spoke a lot about interest rates, and how uncertainty over the future of rates can throw a lot of volatility into the private markets, or make VC exposure less appealing to some investors. All of these macroeconomic indicators are influencing Brex’s business, too, as it’s a venture-backed fintech that depends on startup spending for corporate card revenue.
“We have Brex Cash, which is a business that benefits from rising interest rates, but no question, we are a company that serves startups—and as startups pull back on spending, that affects us, too,” Tannenbaum says.
In October, Brex announced that it had laid off approximately…
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