Pitch Deck Credit-Card Startup Tandym used to increase its funding round
- Tandym is a new fintech that hopes to reinvent the old-school world of in-store credit cards.
- It competes with the two traditional players like Bread Financial and buy now, pay later.
- See the 23 slides Tandym used to raise its funding round from investors like Gradient Ventures below.
Jennifer Glaspie-Lundstrom is no stranger to the private label credit card industry. As a former Capital One executive, she worked in both the card giant’s co-brand partnerships division and its technology organization during her seven years with the company.
Today, Glaspie-Lundstrom hopes to use that experience to innovate in a sector originally created in shopping malls decades ago.
Glaspie-Lundstrom is the co-founder and CEO of Tandym, which offers private label digital credit cards to merchants.
Store and private label credit cards aren’t a new concept, but Tandym targets small and medium-sized merchants with less than $1 billion in annual revenue. Glaspie-Lundstrom said the group often struggles to offer private label credit due to the expense of collaborating with legacy actors.
“What you have is this example of a very valuable type of product that merchants love and their customers love, but a huge untapped market that has so far not been served, and so that’s what we’re doing with Tandym,” Glaspi-Lundstrom told Insider. .
This month, Tandym announced the launch of its platform, along with a $60 million seed round. The round consisted of $10 million in capital led by Gradient Ventures, Google’s AI-focused venture capital fund, in addition to participation from Obvious Ventures and other investors. The round also included a $50 million debt financing that the fintech said would allow it to expand its network of merchants.
Private label cards cut out middlemen such as issuing banks and networks by working directly with merchants, who can then pass the savings on to customers in the form of rewards.
Merchants using Tandym will be able to offer their customers at least 5% back in rewards and will only pay 0.5% processing fees to Tandym, compared to the 1.5% to 3% charged per transaction by major providers of credit cards.
Tandym also offers an alternative to traditional credit
Glaspie-Lundstrom said Tandym’s technology will allow it to compete with more established players in the private label space.
“It’s not just the surface layer, making it pretty and making it a nice user interface for the client. It goes all the way through our stack, so things like real-time data access and taking decision,” she said of Tandym’s. back-end capabilities. “Our underwriting models will be just as sophisticated, if not more so, than those of incumbents.”
Tandym uses soft credit, much like those used by vendors buy now, pay later, to approve new users for accounts. The credit application will not appear on a user’s credit report until they have been approved for the account, a feature that Glaspie-Lundstrom says is “the best of both worlds” and will help users to establish their credit.
Since most private label cards offer much smaller lines of credit than typical consumer credit cards, private label providers are able to lend to more consumers, including those who cannot – not be of strong enough credit to be approved for a larger line of credit.
“You don’t have to give someone a $5,000 line that they can put all their purchases on. You just have to approve what they’re trying to buy,” Glaspie-Lundstrom said of of the private label decision. “So if you take a $100 risk on someone, you’re much more likely to approve of it than if you take a $5,000 risk on someone. So by the nature of this product, you can just extend credit to more people, and they can use it as a credit-creating tool.”
While the store’s credit card may seem like an artifact of the past, Glaspie-Lundstrom and Tandym hope to appeal to younger customers who have grown accustomed to using buy now, pay later services.
Glaspie-Lundstrom said it doesn’t necessarily view players like Klarna, Affirm and Afterpay as direct competitors, since Tandym offers users the ability to build their credit, as well as rewards offers.
“There are customer segments that are reward-driven, and there are customer segments that are funding-driven,” she said. “Buy now, pay later overall targets this financing need.”
Incumbent space players are also looking to adapt as the need for digital capabilities becomes more pressing. Bread Financial, formerly known as Alliance Data Systems, was an early provider of private label cards, working with brands like Victoria’s Secret and Ulta Beauty.
Alliance Data acquired fintech Bread in 2020 and has since invested $1 billion in expanding its digital capabilities. In addition to its store card business, it also offers buy-it-now, pay-later and e-commerce loan products, as well as consumer credit and savings products under the Bread brand.
Barclays, another long-standing private label and cobrand player, announced a partnership with fintech Amount in April 2021 that allows brands to offer white label installment plans at their point of sale.
As Tandym evolves, Glaspie-Lundstrom said it wants to strike the right balance between enrolling a large number of merchants and pursuing retailers with larger gross merchandise value targets. The first three Tandym merchants are currently online on the platform.
Besides growth, Glaspie-Lundstrom said Tandym is focused on innovation.
“When you operate in the traditional value chain, there are only so many degrees of freedom,” she said. “For us, by creating a new network, we’re essentially rewriting the rules, and that allows us to cut costs and give so much money back to merchants.”