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FinTech: Iroquois Capital's payments startup doesn't rule-out capraise
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Daniel McGugin

IROQUOIS Merchant Services LLC, an Iroquois Capital Group startup, has strong access to a network of investors, but after 2015 larger asset-acquisition opportunities may call for new money.

ICG Managing Director Daniel McGugin is president of the IMS portfolio company. He told Venture Nashville the IMS business began greenfield operations in February, and is now serving "close to 1,000" entities, producing a 38-state footprint.

IMS, a merchant-services provider and independent sales organization, now has relationships with Atlanta-based payment processors Elavon (U.S. BanK) and First Data; and, it is finalizing an indirect relationship with Cincinnati-based Vantiv, McGugin confirmed.

McGugin, 37, declined to discuss IMS's financials at this stage, but said that after six months of operations the business has eight payroll employees, as well as at least 30 contracted representatives.

IMS stresses organic growth, but the company is steadily scouting book-of-business targets; and, its asset acquisitions are likely to take IMS's reach into at least two additional markets in 2016, said McGugin.

IMS market entries and asset buys will be agnostic with respect to geographies and verticals, he added, even though ICG naturally prefers development closer to home and has heretofore been better known for its experience in healthcare and financial services.

In developing IMS, what can only be termed a well-poised ICG seems likely to be highly selective in accepting any investment from outside the 600-or-more high-net-worth investors with whom the company and its affiliates already maintain relationships -- a critical mass generated largely in the course of growing of its REIT Investment Group.

The co-founders of ICG and now members of its board of directors are John F. "Jack" Jacques, a long-time corporate financial executive, entrepreneur and investor; and, David Johnson, who after a stint with J.C. Bradford, built and then exited his own asset-management firm, via sale to Stifel Nicolaus. Also on the board are the CEO of ICG, Bill McGugin, the twin brother of Daniel; and, Cleveland-based attorney Joe Corsaro.

The ICG advisory board includes nine worthies, most of whom are recognizable for their decades-long roles on Nashville's investment landscape, including Lucius E. Burch III, Harry Jacobson M.D., Raymond Pirtle, DeWitt Thompson and Fleming Wilt.

Since ICG's earliest stirrings in 2006, ICG has started or acquired, in addition to the IMS and the REIT company, Iroquois Financial Partners, Covenant Surgical Partners, Community Care Solutions, Iroquois Captive Solutions (captive insurance entities and programs, 2013), Iroquois Security Monitoring and BASS Medical (growth capital).

Linda Costello

ICG's four-year-old freestanding investment banking practice is led by Linda Costello, who previously spent nearly 30 years with Avondale Partners, J.C. Bradford and Dean Witter.

The IB practice is expanding its reach, Costello told VNC, adding that most of its clients will be companies with less than $100MM revenue, but could be smaller companies with as little as $2MM EBITDA. Costello said she believes Iroquois' IB is differentiated not only by experience and network, but by its absolute industry and geographic agnosticism.

On the debt side of things, Iroquois Financial Partners has $35MM capital under management for debt-financings of $1MM-$5MM available for acquisitions and growth financing, leveraged buy-outs and refinancings, according to ICG's website.

Iroquois Merchant Services offers credit-card processing, e-commerce, Mobile processing, security, gift and loyalty products, electronic check services. It also offers credit card processing terminals, point-of-sale (POS) terminals, Mobile solutions and Cloud-based terminals.

In building its fledgling IMS business, ICG/IMS is advised by Blackline Payments Advisors LLC, a business consultancy affiliated with the Frost Brown Todd law firm and chartered in Tennessee in May 2014. Blackline is led by CEO Pat Moran.

McGugin said IMS's other advisors include attorneys with Frost Brown Todd; commercial bankers with Avenue Bank and Metropolitan Bank; and, accountants with three firms: Carr, Riggs & Ingram; LBMC; and, Osborne & Co. VNC

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Tags: Avenue Bank, Avondale Partners, banking, BASS Medical, Bill McGugin, Blackline Payment Advisors, captive insurance, Carr Riggs Ingram, Community Care Solutions, Covenant Surgical Partners, credit, Daniel McGugin, David Johnson, DeWitt Thompson, Elavon, financial technology, fintech, First Data Corporation, Fleming Wilt, Frost Brown Todd, Harry Jacobson, Iroquois Capital Group, Iroquois Captive Solutions, Iroquois Financial Partners, Iroquois Merchant Services, Iroquois Security Monitoring, J.C. Bradford, Joe Corsaro, John F. "Jack" Jacques, LBMC, Linda Costello, Lucius E. Birch III, Metropolitan Bank, Osborne, Pat Moran, payment processing, payments, Raymond Pirtle, REIT Investment Group, U.S. Bank, Vantiv

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