The serial entrepreneur behind tech firm CardConnect Corp. and a massive South Hills sports complex has a new venture that he plans to grow through acquisitions of local companies and properties.
Brian Shanahan told the Pittsburgh Business Times in an exclusive interview that he’ll spend between $80 million and $100 million locally, chiefly to build Pineapple Payments, a payment processing startup aimed at the business-to-business and government markets. Shanahan, who serves as CEO, plans to invest as much as $20 million of his own money.
Pineapple Payments will be based on Pittsburgh’s North Side and hire between 10 and 20 employees during the coming months, he said.
“I secured a lease for the penthouse of the Northern Light Tower,” Shanahan said.
He added that he has the right of first refusal to purchase the 40,000-square-foot building, located at 1010 Western Ave. Tusk Development, which manages the building, did not respond to calls for comment.
The start of Pineapple Payments is a bit complicated. Seven months ago, Shanahan was introduced to Jon Halpern and Brian Gross, who founded AthleteTrax in 2012 while they were, respectively, students at George Washington University and the University of Pittsburgh. AthleteTrax became an AlphaLab company and developed point of sale and online registration tools for the recreational sports market.
Shanahan was contacted as a potential investor. But, as owner of Cool Springs Sports Complex, a multipurpose sports facility on a 58-acre campus in Bethel Park, Shanahan had another proposal.
“I said, ‘Why don’t I become a customer first?’” Shanahan recalled. “I switched Cool Springs to AthleteTrax and I was very impressed with Jon and Brian and what they’d built. But they thought they were a software company and what they really had was a payment platform.”
So Pineapple Payments was formed, Shanahan’s fifth payment processing company. Halpern and Gross came aboard, as president and COO, respectively, and the new company entered into a joint venture with AthleteTrax, to serve as its exclusive credit card processing provider.
“AthleteTrax sells their software to sports and recreation parks, but what we’re doing now is giving away the software to get the payment side of the business (for Pineapple Payments),” Shanahan explained. “We also raised $1 million.”
That included new investors, whom Shanahan described as “friends and family” and capital AthleteTrax had, which brings in Innovation Works among others, as investors. Bryan Greene is running the day-to-day operations of AthleteTrax, Halpern said via email.
Then there’s the CardConnect part of the endeavor. Shanahan founded the electronic processor of credit and debit cards for merchants in 2006 as Financial Transaction Services. Due to a series of acquisitions, some operations —and Shanahan — remained in southwestern Pennsylvania but the company, which took the name CardConnect three years ago, eventually set up headquarters near Philadelphia in King of Prussia.
CardConnect merged with FinTech Acquisition Corp. in a $438 million transaction earlier this year, becoming public in the process, and now trades on Nasdaq under the ticker symbol CCN. Shanahan is its largest individual shareholder and served as chairman until recently when he stepped down to start Pineapple Payments; his brother Jeff Shanahan is the company’s CEO and president. CardConnect has 60,000 merchants on its platform and has processed more than $17 billion in credit card transactions.
“I’ll leverage my platform at CardConnect and do business through it with Pineapple Payments,” Shanahan said.
Halpern and Gross will be work at the Northern Lights building. Shanahan will chiefly work from his present base in Bethel Park. His family investment office, Penn Cove Group Capital, will also move to Northern Lights, Gross said.
“I can still live in Upper St. Clair and come in when I need to,” Shanahan said.
“We are going to do two things. We’ll hire people, at least 10 to 20 in the next year, and on top of that, start acquiring local companies, leaning on Jon’s and Brian’s relationships with AlphaLab and Innovation Works.”
Halpern and Gross said via email that they see opportunity in bundling innovative products and services to bring a more integrated and seamless credit card processing experience to the payments industry.
Shanahan envisions making three to five local acquisitions first, and then is open to building Pineapple Payments via deals outside the region.
Link: http://www.bizjournals.com/pittsburgh/news/2016/12/05/cardconnect-founder-launches-startup.html