Brex, the buzzy credit card startup valued at $2.6 billion, is opening a restaurant in the heart of San Francisco’s VC district

South Park Cafe isn't your typical coffee-and-a-pastry-type of establishment. Espresso drinks are on offer in the morning hours, featuring locally roasted Four Barrel beans. But by lunchtime, the space transforms into a chic, sit-down, California bistro featuring pricey, gluten-free plates and trendy mixed drinks.

The owners of South Park Cafe are also far from typical. They have never opened a restaurant before and are not renowned inside Bay Area foodie-circles. Actually, both couldn't be further from what you would expect.

You see, the new proprietors of South Park Cafe — which is located a few city blocks south of San Francisco's financial district — aren't local restauranteurs. They're tech entrepreneurs. Namely, they are Henrique Dubugras and Pedro Franceschi, the co-CEO, wonder-kids who founded the buzzy credit card company Brex, which after its most recent funding in July now boasts a $2.6 billion valuation.

Brex cofounders, Pedro Franceschi and Henrique Dubugras

Brex

As the 23-year-old Dubugras tells the story, the South Park neighborhood has been an important part of Brex's history even before its initial launch in early 2017. The quaint, sunny oasis — which, like its name suggests, contains an actual park — is tucked between the concrete thoroughfares of San Francisco's SOMA District and China Basin and has long had a reputation for being a favorite meeting place for venture capitalists and hopeful startup founders.

Brex was no different. Many of the startup's early VC meetings, Dubugras said, took place in South Park. It's also less than a five-minute walk from Brex's new headquarters, which houses most of its 240 current employees.

So when the original South Park Cafe decided to close its doors after more than 20 years — reportedly due to a mix of pressure from rising rents and the previous owner wanting to retire — Dubugras said he and his team saw an opportunity.

"We saw this as, how could we revitalize this for ourselves and for the community and make something that was awesome, awesome again without the worries of it being like a super profitable business," Dubugras told Business Insider in an interview this week.

The bar at the newly remodeled South Park Cafe.

Katie Canales/Business Insider

"It's fine for a startup to not succeed because then the founder will then go start something else. But it's not fine for them to fail and not pay their bills."

To date, Brex has raised over $380 million on the promise that it will become the corporate credit card of the future.

Initially, Brex launched a credit card built for startups with rewards tailored to the kinds of expenses most common among young, Silicon Valley tech companies — cloud computing software, Uber rides, and food delivery, to name a few.

Getting higher credit limits has also become easier for startups using Brex. Instead of using a founder's credit history to set initial limits — which can be the experience with a traditional bank — Brex mostly considers how much capital a startup has raised and how much money they actually have left in the bank. As a result, million-dollar-plus credit lines can be offered in a matter of minutes.

"We understand that you have an investor backing you. It is much lower risk than someone starting a traditional business in terms of credit," Dubugras told Business Insider in a March interview. "You can go from zero to a working card in five minutes."

Brex makes money every time someone uses its card. As a credit card issuer, it receives interchange fees that are charged to the businesses that accept their card. Interchange fees can typically range from 1% to 3%, depending on the transaction.

Patrons enjoying the South Park Cafe's soft opening.

Katie Canales/Business Insider

Today, Brex does not charge startups late fees or fees for insufficient funds, a common way most credit card companies turn profits.

"We have a very low default rate," Larissa Rocha, Brex's first employee and head of community, told Business Insider in an interview this week. "When that happens at all, it's typically, 'Oh, I moved my bank account and forgot to let you know.' It's typically that."

Rocha said she thinks part of the reason default rates are so low is that Silicon Valley is a close-knit community and founders don't want the reputation of not paying their bills.

"It's fine for a startup to not succeed because then the founder will then go start something else," Rocha said. "But it's not fine for them to fail and not pay their bills. They want their reputation for when they go do their second thing."

Beyond catering to tech startups, Brex has expanded to customers in sectors like ecommerce and life sciences. When asked which business sector the company would tackle next, co-CEO Dubugras said he wasn't quite sure.

"We actually don't know," Dubugras said. "We do know that we want to go [into] verticals that have a macro tailwind. So we're probably not going to go into retail next because that sector is not doing really well. We're probably going to go into a growing sector."

A look inside the revamped space, which previously shut down in late 2017.

Katie Canales/Business Insider

Brex cardholders will now be able to order food while working out of its second story, members-only lounge.

This March, Brex launched the first phase of its unorthodox effort to offer a physical space for customers with a member's only lounge for Brex cardholders.

Dubbed the "Oval Room" — named after both the Oval Office (where big decisions are made) and the literal shape of South Park — the lounge is designed to be a place where startup founders can network and have a place to work in-between meetings with VCs or interviews with potential candidates.

Read more: Here's a look inside credit card startup Brex's new member-only San Francisco lounge

Dubugras told us the space was "not about exclusivity," but instead about "the ability to deliver on the promise of combining a meeting space with the services and support entrepreneurs actually need to run their business."

Opening night at the Brex members-only lounge dubbed the "Oval Room."

Brex

Still, with Fyre Festival documentaries fresh in the popular zeitgeist at the time, comparison's between Brex's Oval Room and Billy McFarland's Magnises Townhouse in New York City were hard to ignore.

Today, the Oval Room sits directly atop the South Park Cafe on the building's second floor.

The company's grand vision now that the cafe is open is that Brex cardholders will be able to order food while working out of the lounge. Dubugras said that the team has been "testing out a few things" regarding perks they can offer Brex members who choose to eat-in. So far, one of the leading ideas is to have a "special dish" for cardholders.

Rocha, who oversaw the cafe's re-opening, insists that the restaurant itself won't be shut down for exclusive cardholder or employee-only events.

South Park Cafe's head chef considers his menu a "classic California cuisine with more of a comfort focus and a little bit of a twist."

This week, as a part a "soft" re-opening event, a few members of Business Insider's San Francisco bureau were invited to dine at Brex's South Park Cafe.

We were greeted by the restaurant's friendly head chef, Peter Mosqueda, who's worked in a number of kitchens around the Bay Area, including his most recent stint on the food team at the online payment company, Stripe.

Head chef, Peter Mosqueda

Katie Canales/Business Insider

Mosqueda's approach to what he cooks, he said, is to keep it "super simple and super clean," letting the ingredients speak for themselves. He considers the menu at South Park Cafe a "classic California cuisine with more of a comfort focus and a little bit of a twist."

A few standout dishes included cured trout with olive oil, chives, and capers with a dollop of creme fraiche on the side, and the gluten-free fried chicken with collard greens and a summer corn relish. A personal favorite was the koji-rubbed steak with brandied mushrooms, which I considered the best representation of Mosqueda's style — not overly ornate or finicky. Just good.

The cured trout with olive oil, chives, and capers with a dollop of creme fraiche on the side.

Katie Canales/Business Insider

Brex co-CEO Dubugras said he wasn't sure if he could pick a favorite dish, but if he had to, it would be the lamb meatballs that come with a house-fermented cayenne hot sauce.

South Park Cafe isn't as pricey as some of the Michelin-starred restaurants San Francisco has to offer. But for people not employed by a VC firm, the cafe is a bit on the spendy side. Small plates range from $6 (for bread and butter) to $16 for the lamb meatballs or chorizo and mussels. Mains range from $24 to $32. The lunch menu will be similar to the dinner menu, Mosqueda said, with an addition or two, like a burger.

The Koji-rubbed steak and brined pork chop.

Katie Canales/Business Insider

The vibe inside was pretty much indistinguishable from any other trendy, new restaurant in the city with big money behind it. Besides one of the kitchen workers who came out to the front wearing a black Brex polo-shirt, there were no other signs that a multi-billion-dollar tech company was behind the financing and operating of the space.

Technically, Rocha said, those who work at South Park Cafe are not employed by Brex, the credit card startup, but one of its holding companies instead. That means, cafe staff members don't receive potentially lucrative stock option packages. They do, however, receive "good benefits packages," Mosqueda said, as one advantage of opening a restaurant with a venture-backed startup on its side.

South Park Cafe's friendly staff.

Katie Canales/Business Insider

As for what its investors think of its young founders using their money to finance a restaurant, Rocha said many were "excited" by the idea because they used to frequent South Park Cafe when it was under its original ownership.

"We have a very good relationship with our investors," Rocha said. "If anything we are way behind in terms of cash burn. We're very conservative. There were questions [about the project], but there wasn't any big push back. If anything, they were excited we were opening the restaurant they used to go to."

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