John Tomich On Raising $130 Million To Transform The $20 Trillion B2B Payments Market

After selling his first startup, John Tomich has already raised $130M in financing for his latest venture. The company, Credit Key, has acquired funding from top-tier investors like Bonfire Ventures, Greycroft, RedBird Capital Partners, and Fortress Investment Group.

In this episode, you will learn:

• Securing your first clients
• Startup fundraising
• Financing your customers
• Why you need strong technical and marketing cofounders

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For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

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About John Tomich:

John Tomich has extensive operating experience helping organizations employ best practice strategies and cutting-edge digital technologies to grow their business.

John co-founded Onestop Internet in 2004 and served as the company’s CEO until July 2015. Prior to Onestop, John was a Senior Associate at Shelter Capital Partners, a Los Angeles-based $200M venture capital fund, focused on early-stage investments in technology and technology-enabled companies in the Southern California area, principally in the media, wireless/communication, enterprise software, and semiconductor industries.

Prior to joining Shelter, John worked as Vice President, Client Services for iXL, a leading Internet services company that provided Internet strategy consulting and comprehensive Internet-based solutions to Fortune 500 companies and other corporate users of information technology. After a series of acquisitions, it is now part of the Razorfish agency, owned by Publicis Groupe.

John is a frequent guest speaker, expert panelist and media consultant on all things digital, with a particular focus on e-commerce.

Connect with John Tomich:

• Crunchbase
• LinkedIn
• Bloomberg
• Forbes
• Rocketreach

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the deal maker show. So today. We have a very exciting founder that has built and scaled I also exited you know, um, a few companies now he’s on he is a recent one and we’re going to be talking about this recent one in detail. But I think that you’re all going to find his journey quite a inspiring so I guess without Furtherdo John Tomm welcome to the show.

John Tomich: Thank you for having me. Thank you for having me good to be here.

Alejandro Cremades: So originally born and raised there in California in Los Angeles so give us a little of a walk through memory lane. How was life growing up.

John Tomich: Life was great. Grown up, no complaints. Ah Los Angeles is a beautiful city. Um, lot of sunshine. Um, and it’s rare I was actually I was actually born raised here and and and also went to university in l a as well. So um, yeah.

Alejandro Cremades: And and I was just going to ask you here I mean it’s It’s very interesting. The um, the choice that you took when he came to studies like what was the ah minor in Russian because you combined that with international finance. But but why russian.

John Tomich: You.

John Tomich: Um, you know Russian was I needed I needed a ah a language requirement. It was ah in in and I wanted to do something I wanted to do something different and I had taken spanish in in in sort of you know grammar school and middle school and and.

John Tomich: Offered russian and I needed a lower division language requirement frankly speaking and and and and this was this is in the sort of late 90 s era if you if you recall and like that you know there was a lot of geopolitical change happening in the Soviet Union and Eastern Europe and so forth and so there was a lot of. Potential economic opportunity in these areas and I thought you know I wanted to finance an international finance specifically was something that I wanted to focus in on and and I thought Russia and I like the language and it just kind of all fit together with the theme of potentially going over to that area of the world and and postgraduate. And and doing some work over there.

Alejandro Cremades: So let’s talk about graduating and now venturing to the digital world because that was with constance. So so tell us about this experience and obviously this was your you know, kind of like your secway.

John Tomich: Um.

Alejandro Cremades: To becoming a founder as well. So how was the experience of venturing into the digital world.

John Tomich: It was I started working for a company I when I graduated from college I put together a list of companies that were doing business in the former Soviet Union and the list was very small in Los Angeles and I came across it and a family friend actually put me in touch with. A ah a guy that had started E Entertainment Television he was a very successful media entrepreneur and he had he had basically built a business exporting old soap operas to the former Soviet Union and made way made a killing doing this and he would. Um, give ah give the programs away for free to the russian television stations and keep the advertising the rights and the advertising revenue and so I started actually working for him under the auspices of hey I wanted to get involved in Russia and our but you know international finance degree in a russian language minor and. What happened soon after that is Microsoft he had this this business this consulting business and because of what he had done building a television ah cable television network we got approached by Microsoft to build and to do ah the business plan and some consulting work on an interactive Tv station. Right? This is back when interactive tv was was ah in vogue and that’s kind of how I got involved in digital and I was the young guy in the in the firm and and the analyst and I started writing this business plan for interactive television and and and the next thing you know we got acquired this is in the in the late 90 s as well.

John Tomich: During the dot com kind of the the peak of the.com days and we we got rolled up into a company called Il enterprises which ended up going public at the height of the dot Com bubble and so it was a real seminal experience for me in my career. Not only that I experience. You know, sort of the the nascent kind of growth of the internet digital technology. But then subsequently the whole thing exploded right? So You saw the casualties of kind of Hubris and exuberance in the digital Tech World. So There was a lot of learning lessons that happened early On. But. I I cut my teeth in e-commerce at that company that that company Il Um, and and and subsequently led me to my first real successful entrepreneurial. Um.

John Tomich: Enterprise which was a company called onestop internet that we built around the idea that that this is in the mid two thousand s post dot Com bust that businesses were going to outsource a lot of their kind of core e-commerce operations right? and. Fulfillment. Yeah know there’s a bunch of areas to run the ecommerce site that you need real expertise in fulfillment is 1 of a warehouse space pick packet ship, returns, processing etc. Customer care. You need people to answer the phones live chat email. You need a technology platform to run everything. You need to do the the sort of creative kind of design and and content that like the ornaments around the tree that skins that ecommerce platform obviously product photography. There’s ongoing operational maintenance. Um, marketing and analytics you have to drive customers to the website and then communicate to those customers on an ongoing basis to bring them back, Etc, etc, etc. All of these complicated operational processes for a company like let’s say in the apparel space that’s focused on you know making blue jeans or making you know. Women’s dresses is a lot of times outside their their area of expertise and so we we built this business around going to these brands and essentially they outsource their entire ecommerce sort of operational infrastructure to us on a revenue share basis.

Alejandro Cremades: And what was the um for the people listening to really get it. What ended up being the business model there. How were you guys making money.

John Tomich: Um, we would do all of the stuff that I mentioned to you earlier right? So there’s those all those categories of service. Believe it or not and um, we would sign multiyear contracts with these brands like Lulu Lemon was a client for example and we would sign a multi. We signed a multi-year contract. And we would we would perform all these services and act on their behalf so we would build we built their website ran their website ship. The product that was ordered from their website answer the phone lululemon.com how can I help you, etc, etc and we would get a for all of that all services. Ah, we would get a percentage of the sales generated on the website and they would provide us with the merchandise on consignment that would sit in our warehouse so we didn’t take any inventory risk so we were essentially acting as their virtual outsourced ecommerce.

John Tomich: Operations division and we would get compensated on a revenue share basis.

Alejandro Cremades: Now in this case for you guys I know as well that your first day client was von dutch. So how was landing you know such a client like that early go ahead.

John Tomich: Um, yeah, you remember that we that was ah that was just a personal connection that we happen to have with the business that a woman that I used to work with was the. Happened to be the Vp Of Marketing at fond Dutch and approached me and said can you help run our e-commerce or because I worked at that previous company and frankly, the ah the idea around the revenue share model kind of came from them not having a lot of money so this was. Early von dutch and then if you don’t remember this brand. It was. It was a real pop culture phenomenon in in the mid 2000 and and you know so I think Paris Hilton started wearing it on her reality Tv show and Ashton Kucher was on this this remember the game show Punked. And he was wearing it was the trucker cat phase and they just they they it really exploded and and but in in any case, we we built their yeah their ecommerce kind of infrastructure and I hired a skeletal crew at that point. And then they didn’t have any money so the way that that we were going to get compensated with the revenue share model that turned out to be a fantastic business model. Um vo duch was very successful and we used the cash flow from vo dutch to reinvest in the business and then get.

John Tomich: Portfolio theory right? So we we we knew that vo dutch as a pop culture phenomenon it was not going to last right? The stars that burn the brightest burn the fastest as they say. But if you applied a portfolio theory to the business model and we got other apparel brands in this category. We could leverage our operating sort of cost structure across multiple clients and and and really build a successful business around this so that that was kind of how it all how it all evolved from Van Dutch and at one point we had one stop. We had a hundred apparel brands. That we were managing and it was the who’s who of sort of contemporary fashion brands all under one sort of roof.

Alejandro Cremades: So Let’s talk about Let’s let’s talk about it as well onboarding customers in in creative ways I know that gifting you know also has been something that you’ve used too. So. So Why gifting and give us you know like some of those real live examples that you used.

John Tomich: Um, you know I it’s a it’s it’s a’s a it’s a great it’s a great question it’s a great topic and it’s and and in in both companies one stop and then might the the current business I’m involved that I’m running credit key. We’ve we’ve used gifting. Campaigns um, focused gifting gifting initiatives to get to get our our first clients essentially our so our second client in the case of onestop. But um I always say sales and and and particularly enterprise sales in my opinion is 50% sourcing and and and 50% you know closing the deal once you’re in the door right? but but getting getting in the door. Um, as as as simple as it may sound from the outside looking at is extraordinarily difficult for these large organizations and they are. There. There are like in the e-commerce space. For example I used to use the analogy of like if you go to one of these ecommerce trade shows like shop dot org or internet retail they have these shows every year there are yeah 800 exhibitors and they’re all selling something these exhibitors right? and they’re all selling something that you plug into your ecommerce shopping cart funnel to optimize something. It’s some sort of marketing optimization tool or it’s a payment method or whatever it is. They’re all trying to get to the same director of the Vp of ecommerce at thegap.com.

John Tomich: And so those folks they can’t even answer their phones so they’re such an they’re such they’re so inundated with sales calls and so getting getting the door opened is like I said extraordinarily difficult and so one of the one of the techniques that I’ve utilized. is is I sent and I I’ll give you an analogy an anecdote at one stop. We were trying to get our second our second big client at the time was a really big denim company called true religion brand genes right? and the Ceo wouldn’t the Ceo wouldn’t take my calls and so i. Um, made this huge custom check like the type you see on like the prices right of the game shows and I wrote you know pay to the order of true religion brand genes and I made it sort of um, representative of of what would happen to them if they signed a deal with one stop. And then I had sent 100 flowers roses to the office and so the check arrived and the roses arrived and it was unique enough and it really grabbed the the Ceo’s attention and I got a call and he said come on in like you, you’ve you’ve. You’ve gotten my attention. Nobody’s ever done something like this before and we ended we ended up closing that deal and it became one of our sort of like flagship clients. But I did the same thing I just want to want to share 1 more thing I did the same thing at at at.

John Tomich: At credit key I was in the Apple store one day with my head of sales and they had these these these these mavic drones there and these really sleek white boxes and that’s a nice gift I mean it’s a $500 drone right? and I thought wow this is really what a great gift. Occurred to me the light bulb went off and at the same time we were talking about going to a trade show. It’s early days of credit key and we’re looking at the budget for the trade show and it was going to cost us like $10000 to send you know 3 sales reps to the trade show. We have to fly into chicago and the hotels. Passes for the for the conference and everything else and I said you know instead of spending the $10000 on trade shows. We should do this I want to do something that worked for me at one stop. We should get a list of 20 ceos and we’re going to send them I’m going to buy 20 of these drones. It’s going to cost us $10000 right? And I’m going to send a drone and we got these custom cards made up that said, um, you know raise raise your revenue and it was a picture of a drone like pulling up a dollar sign said raise your revenue through credit key and I signed it with my my like a real wet ink signature and I sent it out and I must have gotten 10 calls on my cell phone directly. And people are just like the drone landed on their desk so look It’s a great It’s not foolproof and it’s hard to you know there’s challenges in scaling it right? You can’t do this for a thousand you know people but on a select basis. It’s been a real tool for us to use to get to get to get our foot in the door.

Alejandro Cremades: Now with a one topic. Also you guys raised some money. How did you guys capitalize the business.

John Tomich: Ah, one stop was was it was ah was a great economic model and I mentioned to you as I mentioned to you. It was a revenue share right? So we had our first successful client with bondage that started really generating a lot of cash. So it was. It’s it’s it was a unique startup experience right? And so we we also were the custodians of the of the cash that would run through our processing accounts remember we ran these e-commerce sites so we would sign these brands out these these these retailers and then we would essentially settle. next month not to get too into the accounting details here but we would settle the next month for the previous thirty days and we had so many of these brands that we started to build up this. It was like a negative working capital kind of situation to our benefit and it really it really financed the business right? Um, and but we had that first successful.

John Tomich: For successful client so we were profitable early on in in that particular business idea and we actually were fortunate I guess or depending how you want to look at it but we had ah we had financial institutions approaching us. Because they heard they’d heard about us as a company they knew we were a pioneer in this nascent growing ecommerce services space and so we had Vc firms reaching out to us. Um, and we ended up selling pieces of the business off to. Ah, these investors we did a series a and in 4009 which was a really interesting time to do do a financing 12009 if you remember the the market was crashing. Um, and then we did another deal in 2011 in this particular company and both were.

Alejandro Cremades: Now.

John Tomich: Ah, we sold pieces of the company to outside investors. So it wasn’t cash on the bounds sheet it was that we were selling pieces of our business to these investors.

Alejandro Cremades: Yeah, got it now now in this case I mean you guys you know were at it for 14 years so that’s quite a quite the journey. So I guess a yeah, absolutely so I guess after you know like being for for so long you know with with a company.

John Tomich: It was a great run. It was.

Alejandro Cremades: Tell us about how you know the the next you know your next baby I mean as they say once an entrepreneur always an entrepreneur you know how they’d credit. Keep you know come to life because I know that there was a patent there and 1 of your buddies from New York you know how did that all come about.

John Tomich: Yeah I mean I I ended up still transitioning away from ones stop as a business and took a board. It was a chairman of the board and um around two thousand ah two thousand and fifteen I got approached. And I was looking and and I think I was such an entrepreneur for so for so long or I was an entrepreneur for so long. This is just what I do it’s in my blood at this point right? So I knew I was going to do something else and I was I was looking for. You know what? that opportunity was and my my my sense was it was something in e-commerce and. Um, serendipity was I got approached by a guy that I know a very successful New York -based entrepreneur who came to me and said I have a patent on financing credit card declines and believe it or not i. But shocked that that you could even patent something like that. But the idea was at point of sale if you’re using a credit card to transact and it gets declined the ability to finance that transaction we still own that ip by the way but he came to me and said do you think there’s a business around There’s all these alternative. Payment companies out. Um online right? like a firm and paypal credit and klarna and and so forth. Do you think there’s a business to be built around the credit card declines like the folks that just go there and get declined and never come back and if you if you went out to those if you went out and and and and retargeted those.

John Tomich: Customers those lost customers is their business to be built around that and this cost per acquisition model is known in the industry where you get a percentage of the sale generated from you know, bringing that customer back right? Retargeting you’ve seen this as a customer right? where someone will retarget to you. And so I thought you know this is this is interesting and I went to onestops data and we had probably a hundred brands at that time doing a billion dollars in transaction volume across all these brands and I found out that 15% I did some digging into this because I hadn’t thought about it. 15 % of alltra credit card transactions get declined one 5 um, and I thought wow that’s a big number. You know if you’re if you’re ah if you’re a you know gap and you’re doing a billion dollars and in in in gross merchandise volume on your website a 50000000 falls out. Ah, hundred and fifty million dollars falls out and you don’t know what happens to that right? and and so I did what I discovered is half of it. 50% is credit 50% is credit related. So the the issuing bank on the card is basically making a decision that you know what we’re we’re gonna decline this transaction that could be your a day late on your payment or your dollar over your limit or whatever it is but they’re making a credit decision on you and they’re not in the business of re evaluating your credit real time so they just decline you move on 50% of it is.

John Tomich: Some sort of fat fingering the cvb number or there’s a fraud screening algorithm that you know Alejandro suddenly starts shopping for his holiday gifts on a plane going going to europe and he’s fifty miles from his billing zip and there’s a velocity trigger that happens because you’re trying to order a lot. You get? you know that kind of stuff but it was a big enough number that we ended up going. There’s there’s something here. Let’s build a business around recapturing these lost sales and so we myself and this gentleman invested our own capital and started building I hired some developers and started building. A product around this and so we built we built we built the mv like what they call the Mvp minimum viable product in the industry we built the Mvp and then I I said I have contacts for my e-commerce days. In the industry I’m going to get some people I know in the industry to pilot this product this decline financing product and so I started calling calling around and and I got some people signed up. Um and this is the interesting part. And this is the I use the you know the old Reese’s peanut butter commercials where they have the chocolate and the peanut butter and they kind of they fall together and they create this really innovative product I went to a b to b one of the folks that I called was a b to b business to business ecommerce merchant now I had spent all my days.

John Tomich: My time and b to c right? So so you know groceries sneakers that kind of thing I hadn’t really spent a lot of time in the b two b space and and frankly didn’t appreciate how large it’s grown in in recent years and so I went to this one particular merchant and he said to me look. I I sell only to businesses and I’ll pilot. This is a really interesting product idea I will pilot it on my website. But only if you allow me to have another version of it higher up the purchase funnel before they’ve been declined because. There’s not an alternative financing product at point of sale for businesses checking out. Um, and I thought wow that’s that’s amazing that the innovation that I had seen happen in b to c that we had all seen happen with alternative financing and alternative payments. Likelarna and afterpay firm pay Bill me later which became paypal credit in 2009 hasn’t reached b two b and so I went back to my product team and I said um, can we. Can we underwrite these businesses in real time. Can we modify can we build a product went back to the lab. Can we build a product that that that scores underwrites identifies these businesses in real time just like a firm does at um I’ve got one.

John Tomich: I’ve got one just that age 7 6 Yeah.

Alejandro Cremades: Oh yeah, yeah, yeah, no, she’s 6 Yeah well we’ll we’ll edit this piece I mean she she just came you know like a ah you know and she surprised me with that so she prepare a smoothie for me. So yeah, no so I have ah.

John Tomich: I love it. That’s great I have a seven year old I have a 7 year old a 2 year old and a nine year old so um I’ve got my 9 year old a boy and there the other two are girls. Yeah.

Alejandro Cremades: Boys boys or girls. All night I have three girls so I have a a six year old and then I have the 5 year old twin girls. So so good stuff. Yeah, good stuff. But but please please continue John thank you so much and.

John Tomich: Good for you And yeah, yeah, yeah, yes, so so um, this business to this B Two B Ecommerce Merchant said to me ah will use it I Love it I Love the product. It’s It’s really fascinating. Fantastic.

John Tomich: Ah, pilot it but can I also use this higher up the purchase funnel on the payments page when they’re checking out and they’re picking a payment method nobody is offering on the market anything for businesses all of the alternative financing options are all consumer related. And I thought wow this is amazing I went back to our team at our engineering team and said can we build this product and adapt it for businesses I know that you can make credit decisions and scoring decisions on ah consumers right? Every consumer has a Fico Score that’s essentially consumer underwriting. Ah, for all in intentsive purposes right? So if you go to adidas.com and use Klarna to buy a pair of sneakers or you go to peloton.com and you use a firm to buy a peloton bike they’re using your fico score and making a credit decision based on that. So is it. What’s the equivalent and this is and and the answer is. We came up with a product. Well what happened was we we built a product around this. Um, ah that that underwrites and scores these these they call them s and bs these small and mid-sized businesses in real time. So we score this s and b at the website as they’re checking out. We already. We pre-populate this product that we build pre-populates the application process because we already know the name of the business. We know the email phone number. There’s all this data that’s getting inputted in by the user address et ceterat cetera and so we’re we’re we’re.

John Tomich: Scoring off of that data in the background and then we pre-populate the application process we ask a series of additional information. Obviously we need the ein which is the tax Id number and we have a pretty sophisticated underwriting waterfall that makes a credit decision on that business in real time and seconds and then.

Alejandro Cremades: Um, and how do you guys? How do you guys monetize them.

John Tomich: We um, it’s it’s a typical ah the unit economics look very similar to a typical lending business right? So ah, the first thing we do is we charge a processing fee of the merchant. So our our go-to markete strategy. Credit key is that we get distribution through what we call merchants or these are ecommerce websites right? So this is the website that’s selling restaurant equipment and supplies. So the the restaurant a lot of those processes are getting digitized nowadays so that restaurant used to. Fifteen years ago flip through a catalog. Ah for ah for a pizza oven and call the local sales rep that they had and that was an analog process that is now mostly digital or getting or getting digitized at a rapid clip. So not surprisingly that catalog has now been uploaded onto a website. And so those customers go through a purchase funnel looks a lot like amazon.com to make those to make those purchases so we go to the merchant that sells these products and dozens and dozens of different vertical segments from nail salons to coffee houses to dental offices to restaurants, etc etc and we get ah distribution through integrating in their on their payment page as they’re as they’re checking out. Okay, and for that we charge a processing fee to the merchant that is similar to a credit card processing fee. So that’s that’s part of the revenue that we get.

John Tomich: The value proposition for the merchants really is really strong and it’s it’s very similar to what you’ll hear from a firm in Florida and and after paying the rest of and and some of these some of the alternative payment folks that they’re on the b to c space who by the way actually charge a higher than interchange higher within credit card process to fee. That’s where they make their money because they don’t. You’re paying for models a lot of them but we but we ah the value proposition is is is is the the first one the main one the most important one is you’re going to drive incremental lift and sales from adding alternative payments as an option. Ah, ah in the checkout flow. So. We empower the s and b customer with more options more credit they’re going to spend more money and and oftentimes it’ll manifest itself in a larger ao or a order value. So and this is easy to test you’ll see hey we launch credit key with a merchant. And they spend 50% more because the a over the average order value of of people that check out with credit key is 50% greater than the average order value of people that just use visa mastercard american express right. So the the that’s the number one value proposition is you’re going to we drive drive additional sales you drive incremental sales another one is we settle with the merchant just like a credit card company processor does so look did they get their money and.

John Tomich: 2 business days like a credit card company will do instead of oftentimes with a trade credit product. They have to wait thirty forty five days. Whatever their their dso is to get paid and then oftentimes that. Customer will then use a credit card at that point anyway, right? So instead of waiting thirty forty five plus days they get paid in the trade credit trade credit example. Um we give them their money in two business days like a credit card supplement so they get that that factoring cash flow benefit which is a big value proposition right? um.

Alejandro Cremades: In and and what 1 thing that I wanted to ask you here too is that this is your second go audit it as an entrepreneur and you know you see with now with critic key. You’ve been you know for about 7 years I guess

John Tomich: Additionally, there’s there’s this, there’s several others but go ahead.

Alejandro Cremades: You know this second time at it. You know when you had that experience with the ah with onestop like dealing with with venture capital firms too I mean how have you gone about you know capitalizing the business and and how much capital have you guys raised to late.

John Tomich: This this was a different this is complete. This is markedly different than than than one stop one stop. We were cash flow positive very early on. We had a successful client. The model was not. It wasn’t it wasn’t ah so intensive software building exercise like credit key is credit key requires a lot of upfront technology development like a lot of software companies. Do right. And we’re a fintech business so there’s a regulatory compliance infrastructure and needs to be put in place. So this is a capital intensive exercise I’ve been fortunate enough as an entrepreneur to have been successful with my first company. So the early seed capital. Ah, we financed ourselves sort of in the in the in the six figure range right? and that allowed us to not pay ourselves a seller but that allowed us to hire developers essentially but to start building out that and Mvp product I mentioned that we brought to that b two b merchant early on. And some of the iterations on the product that that’s that’s the early early part of it. Um, you know I I talk about there’s 2 types two ways to build a company one is um.

John Tomich: You build a product and then you take it the market and hopefully it it works right? Hopefully people pay money for it that and then the other is you have a company that comes to you and says hey I want this product and then you build it for them specifically I build it kind of the the 2 ways like um and ah. I’m not saying which one’s right or which was wrong, but the ah the the second one we we actually had a client that said hey I like this product and I’ll pay you for it and so it was kind of a hybrid of the 2 different models with with credit key. But um, we ended up you. Our series a we ended up going the traditional venture capital route. You know I’m like I said I’m one of the benefits of of having us been successful as an entrepreneur is you you start to get a network of folks that that will will introduce you to to venture capital. Ah, players or you know those people from your from your own personal relationships and so I had contacts and in in the space and so it was it was pretty straightforward I mean most venture firms you can get in the door with the venture firms right? Um, it’s it’s It’s not exceptionally hard to get a meeting There’s a lot of venture capital firms and and to to get in there if you have a compelling idea. You’ll get ah you’ll get a listen to from somebody. It’s hard to actually convince and it’s challenging to get to get funded.

John Tomich: At at at at a decent you know a to get funded and B to get funded at at ah at a decent price but getting getting in the door we we were able to do and and I think my back our background in in ecommerce mine specifically in the management initial management team that we put together. Plus. The market opportunity that we’re going after is very is enormous. It’s it’s B Two B E Commerce Essentially um and so the investment thesis around building products and technologies for Business-to-bus e-commerce. The evolution of business payments in this digital in this new digital real Estate. It’s It’s really,. It’s really easy to get your head around and and and to understand and see and so um I think it was a combination of just the the sheer Market size. Plus my personal experience and success in the e-commerce space that that allowed us to get that that that initial round of funding.

Alejandro Cremades: So got it. So I guess say in total at too late. How much have you guys raised whether it’s equity or debt or yeah.

John Tomich: Um, we raised ah $30000000 around $30,000,000 in equity capital to date the companies we we issued our first loan in 2019 essentially

Alejandro Cremades: Got it up.

Alejandro Cremades: And what about on the deb side have you guys say needed to raise to on the deb side to to get the operation going.

John Tomich: Ah, well the debt side the debt side. We just put a large facility in place with there’s a press release out there on on the internet but we raised ah $100,000,000 ah debt facility a k warehouse facility with a.

Alejandro Cremades: Okay, so.

John Tomich: With an investment group called called fortress and that is our money that we use to finance these these these payments right? That’s our cost of goods sold if you will So it’s challenging for as a fintech copy. Let me just.

Alejandro Cremades: Got it. So so.

John Tomich: Point 1 thing out the the hard part about raising capital is we have to raise 2 kinds of capital as you mentioned like we have to raise equity capital which funds all the salaries of the developers and our sales folks and the compliance and g and a and and just this the staff the typical sort of folk people that work at the company. And then there’s the debt piece which which is ah a totally different group of investors by the way that will give you what they call a warehouse facility that allows you to to lend and you can’t that’s a chicken or the egg because you can’t get these death facilities in place. At that size until you have what they call sort of like loan tape which is ah which is um, proof of your ability to lend money and do it effectively right? And so you know historic trend you know data on your your credit performance. And so but how do you get that without a facility in place right? So it’s this sort of catch. It’s this catch 22 and so what we had to do in the beginning you have to get very creative. Your first facility is really hard to get not the equity piece but the piece that you’re going to use to lend money out so we had to get 1 of our investors. Very wealthy individual who has you know what’s called a family office and we had his family office set up a separate debt facility very small that allowed us to to do some initial initial lending out of that get some results back and then we refinance that and then we refinance it again and then we.

John Tomich: We recently refinanced it so to speak with with fortress.

Alejandro Cremades: So so let me ask you this John if you were to go to sleep tonight and you wake up in a world where the vision of credit key is fully realized what does that world look like.

John Tomich: Um.

John Tomich: It’s a great question I would say we are as we are as ubiquitous in where the vent with a venmo or paypal for for business to business transactions that that that’s how you from a brand equity standpoint when you think a credit key you think of venmo for business or it’s as it’s as widely. Ubiquitous from a brand standpoint as one of those brands in the b two b payment space. Um, and we’re doing billions of dollars a year in transaction volume 10000000000 plus um, and 25% of that is outside the United States that’s my 5 year vision for the company 10000000000 in transaction volume and 25% outside the us a brand and and in a brand equity position as the market leader. As I mentioned you but you ubiquitous penetration among the who’s who of business to business e-commerce sites.

Alejandro Cremades: I love it now. Imagine if I gave you the opportunity John of going back in time because obviously you know now to companies that you’ve built. You know you’ve been at it now for over you know, 20 years Hasan as an entrepreneur. If. You had the opportunity of going back in time and and having a chat with your younger self perhaps that younger self that you know is now in the digital media you know world and and thinking about launching something of your own and and you were able to give that younger John one piece of advice. Before launching a business given what you know now what would that be and why.

John Tomich: Um, that’s a really interesting question. Um a lot comes to mind I think that um look I’m in that we’re in the I’m in the technology business. Um, fundamentally. And we have ah and successful technology companies I think if we were to go through the list of you know the fan companies for example, right? Um, they all have 1 thing in common that they have very. Successful technology and engineering going to development organizations. Um, and you mean you know Mark Mark Zuckerberg before he was the Ceo of Facebook was I mean ah a brilliant programmer I mean he’s a savant when it comes to writing code. We I mean when we can have opinions about what he is as a Ceo or what have you for the strategic vision of the business of meta but he is undoubtedly ah you know that was the superpower for Facebook was was was tech was tech right? and that’s kind of where I would think I would give myself the advice of. Don’t make sure you I think you need to bring a co-founder on or if you don’t have that experience. You need to understand at least how to navigate through that world of technology and you need to have and oftentimes the the founders might not have it themselves but you need to bring in a co-founder who who.

John Tomich: Um, that’s that’s just an important area to focus on I would I would over index the need to um, put those those the correct technology pieces in place and by the way making a bad decision on technology can kill the company and so. It’s the the the difference between um, being really successful and being an absolute liability or like like this and so I think that’s an important area that I would that I would that I would and that I would overindex. And all also and then the second one would be would be would be sales and marketing sales and marketing sales and marketing right? So those those 2 areas? Yeah um.

Alejandro Cremades: Yeah, no kidding got it? Well, that’s amazing John so so for the people that are listening that will love to reach out and say hi. What is the best way for them to to do so.

John Tomich: You could reach me at John at creditkey.com actually if you if you if you want um, ah J Hn at credit key dot com.

Alejandro Cremades: Amazing. Well hey John thank you so much for being on the deal maker show today has been an honor to have you with us.

John Tomich: Thank you all Andro Thank you sir.

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