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Keri Findley discusses Tacora's strategy in the asset-backed venture lending space.
Key Takeaways
- Keri Findley began Third Point's structured credit business at 25 and spent several years there as a partner before starting Tacora, which does asset-backed lending to venture businesses, a space that traditional banks don't tend to operate in.
- Venture companies can only issue equity, which is dilutive to founders. Tacora structures loans for fintech, insuretech, real estate tech, construction tech, and logistics tech startups against hard or financial assets.
- These bespoke solutions may help a company operate more efficiently and help them grow in a way that is not dilutive, while Tacora gains downside protection from securing the loans against assets that can be sold in the event of default.
Transcript
I'm Keri Findley. I run an asset manager that we're calling Tacora, and I'm the portfolio manager and CEO. We are doing asset-based lending to venture-backed businesses as our main product. I went to Columbia University and started my career at Morgan Stanley and then EOS Partners. I then went to a hedge fund called DB Zwirn, where I did asset-based lending, and then started at Third Point at the ripe old age of 25, where I started the structured credit business there. I spent the first handful of years there picking up the pieces of the financial crisis, and then started getting really obsessed with the fintech market and started creating deals with different fintech originators to be able to help them grow their businesses. I left that and was doing deals by myself with some partners to help fintech businesses and insure tech businesses. And now am institutionalizing it. And it is now called Tacora.
My theory on venture capital is that when venture capital and the 1940 Act exemption, which venture capital operates under, was created, it was really started so that, like, you and your brother could start a venture fund and invest in America. And they had this great idea of let's not make this little family office, you know, $50-$100,000 register with the SEC and have the burden. The problem is the moment they go to create a loan; they'd have to be registered. Venture capital has, you know, changed the world in terms of companies they've invested in, but they have been very hesitant to change themselves. And so, we complement them with bespoke solutions that help a company operate more efficiently - that help a company grow in a way that they're not giving everything away.
I think my edge has always been in creativity. It's coming up with a solution that fits the borrower, fits the company. So when we look at the venture landscape, we look for companies with hard or financial assets, and most of the companies that are venture-backed with hard or financial assets are either in fintech, insure tech, real estate tech, construction tech, and a little bit in logistics tech. And so we will look at any business that either has a financial asset that self-liquidates or a hard asset with a secondary market where if unfortunately, if we had to, we could sell the asset. If we can sell it, we can lend against it.
We're always ahead of trying to figure out how to work out the loan if there's a problem. And the philosophy is to create optionality by not losing money on as many of the loans as possible and achieving excess returns by participating when the company really hits it out of the park.
So return-wise, for this fund, we look to make loans in the mid-teens, which means somewhere between 12 and 18%. My investment philosophy is to create new products, do interesting things, and do it in a way that protects the investor.
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