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Exclusive: Peter Thiel-backed debt fund putting $30M in Exectras

Nov 30, 2023
Illustration of a hand cursor holding four credit cards.

Illustration: Shoshana Gordon/Axios

Tacora, a venture-focused debt fund founded by a Third Point alumna, will put up to $30 million into Exectras, an SMB-focused fintech.

Why it matters: Although deals remain rare since SVB's implosion, startup demand for debt remains high.

Background: Former Third Point partner Keri Findley founded Tacora last year, with Peter Thiel as the anchor investor in the $350 million debut fund.

  • While at Third Point, Findley funded debt for fintechs including SoFi and Lending Club.

How it works: Exectras negotiates the cost of services such as credit card processing, health insurance, and payroll on behalf of its SMB customers.

  • Its pitch: Large companies have more negotiating power. Exectras achieves that level of sway by acting as a unified whole for 800,000 small businesses with some 16 million employees.
  • The new funding will be used to boost Exectras' existing business model.

What's next: It will use that capital to buy up merchant card portfolios. Owning such portfolios gives a company the right to collect a portion of what merchants pay to be able to accept credit cards, known as residuals.

  • Exectras is notably an ISO that acts as an intermediary for the merchant and the processor.
  • That will give Exectras new customers quickly. The company believes that by adding its additional services — payroll, insurance, or something else — on top of that portfolio, it can reduce attrition.
  • Findley says that "10% to 15% of the customers, switch (card processing) providers on an annual basis. Exectras offers these services, which make them less likely to switch."

What they're saying: "Payment processing is no different than gas right now," says CEO Joe Cherry. "If you're driving down the road, you're going to try and find the gas station that has the lowest price."

Of note: Exectras will put its existing merchant portfolio into a credit facility. Tacora, meanwhile, will get warrants as part of the deal.

  • "The way we look at it is: If their services don't work, we get a good outcome. If their services do work, we get a phenomenal outcome," says Findley.

What we're watching: A potential venture funding round, as Tacora tends to focus on venture-backed deals. Exectras, in contrast, has been bootstrapped since its founding in 2007.

  • "We really liked the idea of taking a bootstrap business that has assets — in this case credit card residuals — and helping them grow," says Findley. "Then, hopefully, it gets an injection capital at some point down the line."
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