Kalamata was founded in 2013 by Steven Mandis, a financial services executive who now serves as the company's chairman. The company provides technology, data analytics services and fast financing to small business owners, Mandis stated, noting the company finances $10,000 to $750,000 to underserved small businesses nationwide in as little as 24 hours. In addition, the company is looking to add and integrate its fast processes, tools and procedures with payments.
"Square went from payments to capital," Mandis said "Kalamata is going from capital to payments. Square markets directly to entrepreneurs, typically with less than $250,000 in annual revenues. Kalamata markets via sourcing partners and ISOs to small businesses, typically with more than $250,000 in annual revenues."
Mandis went on to say that the company integrates fast and easy tools, services and financing to better serve small business owners. On a typical day, Kalamata provides capital to between 10 and 30 small business owners who can choose an array of optional value-added tools, resources and services designed to help them create jobs and scale their companies, he noted.
"Providing working capital doesn't only help small businesses but also helps our sourcing partners and ISOs reduce attrition by providing valuable services," Mandis said. To illustrate this point, he noted that Kalamata doesn't have a direct sales model but instead markets its small business products, services and financing solutions through ISO and ISV sales channel partners. These channel partners can syndicate their own deals and white label Kalamata's product and service offerings under their individual companies and brands, he added.
Kalamata is also interested in purchasing portfolios and partnering with payments enterprises—and offers attractive terms, Mandis stated. While Kalamata may offer 42 to 48 times for monthly credit card payments residual portfolios (net of agents/ISO fees), it may consider higher valuations from 40x to 50x, based on contributing factors such as bank and processor channel relationships, low attrition, BIN/portability, portfolio diversification, seller guarantees, size of monthly residuals/economies of scale, and cost of servicing, he explained.
"We also can structure loans against monthly residuals where the owner gets the interest deduction of the loan or structure a loan and then option to purchase providing the owner an interest deduction and possible deferral of sale," Mandis said. "Generally, we are looking for $50,000 to $500,000 in monthly residuals. The key items for us are the monthly net residuals and attrition by merchant and volume as well as breakdown of the merchants by industry code and percentage of net residuals."
As he reflected on Kalamata's year-over-year growth, Mandis, who formerly held leadership positions at Goldman Sachs, McKinsey & Co. and Citigroup, said the company averaged 400 to 500 applications for capital per day in 2021 while providing additional resources, services and benefits to small business owners. Mandis credited Kalamata's success to an exemplary team of over 80 employees. "We paid special bonuses to employees who volunteered to take temporary pay reductions during the pandemic," he said. "Due to the employees' actions, Kalamata did not furlough any employees during COVID-19."
Looking ahead, Mandis observed that Kalamata will continue to evolve and adapt to better serve small business owners and its sourcing partners and ISOs while exploring adjacent opportunities in the acquiring space, which may include acquiring or partnering with companies that provide advisory services to lower credit card payments fees, he stated.
"Kalamata will purchase credit card residual portfolios and look at other acquisitions and partnerships in the payments area," Mandis said. "Payments companies are realizing that providing capital improves client relationships and lowers attrition. However, it is better to partner with Kalamata than underwrite balance sheet and service deals."
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