Tare Is Rebuilding the Plumbing Behind Private Credit

Kristin Myers: Here is a number that should bother you.

When somebody takes out a loan from one of these newer lenders, they may pay 22% in interest. Now, the big institution that ultimately funds it earns about 6%.

So that's 16 percentage points that disappear in between, into defaults, into fees, into brokers, into a chain of middlemen passing spreadsheets back and forth.

Well, today's guest ran that chain from the inside at Citibank and then at BlockTower Credit, the $1.9 billion credit fund that he founded. And now he's trying to tear it all out.

Kevin Miao is co-founder and CEO of Tare. The road from an idea to the opening bell starts right now.

Private credit has exploded into a trillion-dollar market, but the technology behind it, well, Kevin Miao says it's stuck in the past.

Loans can still move through a maze of spreadsheets, middlemen, and disconnected systems, making the process not only slower and more expensive, but also harder to scale.

And Kevin knows this problem from the inside. He ran structured credit trading desks at Citi, then founded BlockTower Credit, building it into a nearly $2 billion private credit fund.

And now he's betting on a solution.

His startup, Tare, is building one infrastructure layer designed to connect the entire credit lifecycle, from originating and servicing loans to distributing them to institutional investors.

And the technology behind the pitch? That's AI and blockchain.

But here's the billion-dollar question: Can Tare replace the old plumbing behind private credit and become the infrastructure this massive market runs on next?

From Startup to Stock Exchange, Kevin Miao is next.

And joining us now right here at the desk is Kevin Miao, co-founder and CEO at Tare.

Kevin, thank you so much for joining us today.

Kevin Miao: Thank you for having me.

Kristin Myers: Okay, so let's talk a little bit about your background.

As we mentioned, you started at Citi. You were running, I want to make sure I get this right, you were running the structured credit trading desks.

Then you went over to the investor side. As we mentioned, you were at BlockTower Credit.

So what did you see in that whole entire time that really convinced you that essentially the whole market needed to be rebuilt?

Kevin Miao: Yeah. I mean, I think it starts with everything runs on Excel.

So I'm sure that there are models built and coded in VBA today that power the pricing for, I don't know, trillions of dollars of loans.

And at various points in time, you start to realize in order to, like, maintain the fact that there are 50,000 Excel files going around, we have an army of people trying to reconcile this.

And that's replicated across every, you know, counterparty that we transact with across the Street, so every financial institution.

Kristin Myers: And when you say Excel, by the way, you mean, like, I mean Excel, like the spreadsheet?

Kevin Miao: The spreadsheet.

Kristin Myers: Okay, just to clarify. That's how far back we're going with this. It feels very antiquated.

Kevin Miao: I mean, it's happening right now.

And I think that's one of the biggest things that I realized, is that, you know, for people like me, I'm 33 years old today. When we kind of came through, like, or grew up, you know, we lived through the financial crisis.

You see the impact of mortgage-backed securities on people's lives.

And then when you get into the belly of the beast and you kind of have this idea that it's, like, nefarious or it's, you know, it's just like these super geniuses running around, like, messing with everything.

That's not true. They're great people, but it's just, it's running on Excel.

And it is today. So it's a huge opportunity for that to change.

Kristin Myers: Okay. So talk about where the biggest inefficiencies are then.

I mean, is it just that it's all running on Excel? Talk us a little bit through, essentially, the plumbing underneath private credit.

Kevin Miao: Yeah. I mean, I think it's obviously not that, but Excel is just a place for you to understand the ground truth.

What is the current state of this asset? How many assets are in this portfolio? How has it changed from the last time that I looked last month to today?

And in our system, like, everything is organized as a chain.

It's, I create this loan, then I sell this loan to somebody else. That person ingests the loan. Then they package it and they sell it to an investor.

And so it's not just about the fact that it's running on Excel. It's the fact that this entire system is not talking to each other.

And so we need to record things at different stages. But every single intermediary point introduces costs and increases the risk.

Kristin Myers: So then let's start from A to almost Z, right?

You know, what actually happens when you go and you take out a loan? What happens from, "I want to get a loan," all the way through to it being processed, it's going through the bank?

Where does the process essentially break down?

Kevin Miao: Yeah. So, well, actually what's happened over the last 15 years is a lot of the origination has moved away from banks, and a lot of the funding has moved away from banks as well and to private credit.

And so, but, you know, Tare, our company, is a lot of things underneath the surface. But on the surface, it is a consumer loan lender. We compete with Upstart, LendingClub.

And how do those loans work A to Z?

So 30% to 40% of the loans in the unsecured personal-loan space are originated through affiliate marketplaces.

So that's places like Credit Karma or Credible and the like.

So what are they doing? They're serving Google ads. They're going out and finding leads on Bloomberg.com and driving traffic to them so that they can wrap that lead up and auction it off to investors.

Now, those marketplaces play a really critical and borrower-friendly role, where you go and apply once and then you're auctioned off to a bunch of people.

But the people who you're auctioning it off to, right, are other lenders.

And the lenders then come in and their product is not the lead. It's converting that lead, understanding: Is this a fraudulent borrower? Do they have the right credit scores? What price should I offer them?

And then once you disburse and get them to sign a document, you create this loan.

And that loan has the promise of also servicing the loan, so navigating the repayments and the customer service over a 60-month duration.

From there, that package of the loan becomes an asset that, you know, my old trading desk at Citigroup would then take, package up in Excel or model out of Excel, and then create new structures.

So if I have, you know, one loan, that's a binary risk. But investors, especially credit investors, they don't want to take binary risk.

And so it's important to have diversified, homogeneous pools of these assets to start, but then also to carve them up into different risk profiles, which is what securitization is really today.

But to execute that process, we need to ingest all of this information about the lead, the asset, the servicing, what the state is today, how do we continue to navigate this, what are the covenants and the triggers on the liability side that an investor is actually investing into?

And none of those pieces talk to each other in real time today.

Kristin Myers: Right. So that's how it works.

Okay. So then by your own math, so a borrower pays, let's just call it 22%. Senior lender is earning 6%.

So then where do the other 16 percentage points go?

Kevin Miao: Yeah. Well, I would say, I mean, the one thing that is not controlled by, you know, blockchain, AI, or any of the other things that we're building, Excel, is the risk of default, right?

So let's say on these types of pools today, it's trading anywhere from 8% to 10% per annum default rates.

So we're calling 10 to 12, or sorry, 12 to 14.

But from there, there's a point from servicing fees. So the originators who are navigating the repayments, the customer service, which is, up until recently, a very, very manual process.

The idea that the investor, the senior investor, only exists because there is a junior investor, oftentimes private credit.

So what is the private credit fund looking for? Well, they're really looking for, you know, call it 15% levered.

Why are they looking for 15%? Because they need to charge two and 20, which means they need to get access to the 6% cost of capital.

And then you start to understand, okay, well, what does the originator need? The originator needs origination fees, servicing fees.

It's really a lot of, like, components backed up.

I'm sorry.

Kristin Myers: No, no, no.

Kevin Miao: I decided to have a coughing fit right now.

Kristin Myers: It's all good.

So then it sounds like this is all friction and administration.

Kevin Miao: Yeah. I think that's a big part of it, but I think a big part of it is just a lack of understanding, a lack of understanding across...

Kristin Myers: Go ahead.

Kevin Miao: Oh, man. I'm sorry.

Kristin Myers: I know. Keep going, keep going.

Kevin Miao: I'm good now.

It is a lack of understanding, and of understanding that you're in this chain in and of itself.

Everyone thinks only about, like, the piece that they're at today.

And as private credit grew, it became much more fragmented, and the communication between these nodes became much more difficult.

So, yeah, it's friction. But the friction is really because all of these different points of intermediation exist about what is a loan? Who is this person? How do I get money from one place to another? What are the rules that I need to follow?

So I'll pause there.

Kristin Myers: Let's follow a dollar of credit from one end of this market to the other.

So a borrower pays 22%.

First, there's the expected losses, as Kevin was just talking about. Now, 8% of these loans are assumed to default. That takes the rate down to 14%.

Then you have the originator. That's the company that made the loan. They get about 4% for finding the borrower and servicing the account. So now we've got 10% left.

Then we have a broker that's moving the paper from one side to the other. That's going to be another point and a half.

And then you have the equity investor who takes the first loss and wants to be paid for it.

So that's about 8.5%.

And at the end, the bank or the insurance company actually funding it, that's 6%.

So 22 in, six out. Every layer is going to be somebody's business model.

We're back with Kevin Miao, co-founder and CEO of Tare.

Kevin, again, thank you so much for rolling with us.

So we were just talking a little bit about the friction, the administration that's essentially being charged for.

But I want to step back just even a little bit further because you actually ran almost a $2 billion fund, which is pretty incredible.

So what did you see as a buyer that, you know, you really couldn't see as a trader?

Kevin Miao: Yeah. I think it really starts with that many of the problems that you deal with as a buyer are the same problem.

So how do you navigate portfolio fund management, NAV, accounting, and the like?

And these were things that my fund was very unique, even to this day, in the sense that we built smart contracts to operate our fund and all the middle-office and back-office work from end to end.

So what we do at Tare today is really an extension of what we were building for the last five years at BlockTower, and how we can use technology to solve a lot of the problems that you kind of see in terms of administration.

But I think the other side of it is that, you know, the buy side is very simple.

So, like, we have a fiduciary duty to, like, generate great returns.

So if I can buy the same asset at a cheaper price, I have literally a duty to at least explore it.

And so I think a lot of, you know, companies that are started by people who are trying to attack the capital markets, they complicate everything.

And they try to, well, on one side, they try to approach everything from first principles.

There's nothing first-principles about our market. Regulation distorts everything.

But on the other side, like, the easiest way to sell something to somebody is to create the same asset that they're already buying and sell it to them at a cheaper price.

So that's really what we want to do.

Kristin Myers: Let's talk a little bit about who actually owns what.

So you point to Tricolor, which is a subprime auto lender. It collapsed. It collapsed with allegations that the same collateral was pledged to multiple lenders.

Which, no one can see the face I'm making right now, which is, you said classic.

So then what does that say about who actually owns what they own?

Kevin Miao: Yeah, I mean, ownership is, there's a lot of different aspects of it.

So there's the legal ownership under the Uniform Commercial Code.

There's, you know, ownership that is just denoted on a piece of paper between us.

You know, obviously at the institutional scale, like, there are very regimented ideas of how to denote legal ownership, which means how do I go out and enforce my claim in a court of law?

And so there are all of these things that you can paper over with high-powered lawyers.

But, like, at the end of the day, if somebody commits fraud, you can't catch them.

So this is really one of the core reasons why people, and us included, build our balance sheet on a blockchain.

So every single dollar that comes in and out is tracked against an asset.

If we tell you that, hey, there's an asset that we've pledged to this securitization, then you'll see the dollar come in from the borrower to the end investor, all in one chain and all fully auditable.

And that's the benefit of being on a shared Excel file, basically.

Whereas if you think about Tricolor or something, it's really like, well, I've got a dollar in from this borrower. I've pledged it over here, so I'm going to send it to Deutsche Bank.

But I'm also going to go and borrow money at the corporate so that I can pretend to, you know, this other bank that that borrower is actually paying them so I can keep this Ponzi going.

Kristin Myers: I was going to say, it sounds exactly like your classic Ponzi scheme.

Kevin Miao: Oh, it absolutely is.

And there are, I mean, Tricolor is, like, hilariously a joke when it comes to just, like, how bad it went.

But smaller versions of this happen every day.

Again, not in nefarious ways, but just from the fact that you're not able to keep track of the fact that, hey, I have these covenants on this early-stage fintech that I'm backing out of my fund, BlockTower Credit.

So how do I ensure that every time they ledger an asset or a promise in their own system, that I can read it as well?

Because I don't have that. I only have an Excel export.

And so there is so much trust that needs to be papered over with high-cost lawyers, legal documents, that really, again, like, if we're just all looking at one Excel file, like, it wouldn't be possible.

It's like this person, or this cell B11, owns this asset or deserves this money, and that money can't be anywhere else.

Like, this double-entry accounting system needs to balance.

Kristin Myers: It sounds so scary and also so terrifyingly simple that we should be seeking a solution for this problem.

So let's, okay, let's talk about Tare and Tare, right?

So you guys are using blockchain. You guys are using AI.

How exactly does that work in terms of what you guys are doing, in terms of, sounds like, fixing a lot of these inefficiencies?

Kevin Miao: Yeah. Well, I think, again, we think about the blockchain as really, to take this Excel idea even further, instead of having 50 different files floating around because there are all these different counterparties transacting with each other, we're all looking at one Google Sheet.

And the blockchain is a superpowered version of that, in which all of the formulas that you use, which dictate, okay, well, who should get money in this situation?

They actually do things. They're smart contracts that actually move money from one account to another.

And then the final primitive of a blockchain that separates it is the ability to, like, denote ownership.

So this concept of tokenization, which I'm sure you've heard about, is really just like, okay, well, here, this cell D11 says it's $50 million. Who owns it?

Well, let me wrap it in a token and let me give that to a person.

And so that core underlying ledger of assets, payments, and ownership is what we use the blockchain for.

It's not like, you know, some crazy ideological thing. It's just like, it's a shared, superpowered accounting ledger.

But on top of it, there are many edge cases that you have to deal with when you deal with human beings or, you know, like any sort of predictive capability, which is really what credit is.

Like, I can make a loan to you today and a loan to you six months from now. Same person, same loan, but it's not the same credit.

Something has changed. Like, the passage of time has changed, like, who you are.

And so how do you deal with that in a nondeterministic way?

That's really where AI comes in, and why it's very, very different to build something today from prior versions of this, is how you build an AI-native company from a single system of record, and then treating agents as first-class customers or users of your system, as opposed to we're building this for human beings as, like, the person who's going to push paper.

For us, it's AI, like, throughout the up and down.

And ultimately, like, why are we doing this?

Like, the goal is, if on one side the borrower is getting X and the investor is getting X minus Y, and that Y is all of the cost of intermediation, then really, like, at the end of the day, the winning product is going to have the lowest cost to serve both sides of the market.

If you get a mortgage today, you pay 7%. Somebody buys it in a TBA, they get 5.5%. Where's that 1.5% going?

And so whoever can deliver that, you know, a 6.5% mortgage to a borrower and a 6% return to an investor, and can be profitable for less than 50 basis points for a variety of whatever, you know, innovations they bring to the table, that product is going to win.

Kristin Myers: So to that point, I'm curious to know because it sounds like the plumbing is becoming more efficient, which means it gets cheaper.

But do those savings get delivered back to the borrower? Is someone's margins just getting fatter?

Kevin Miao: You know, I think it's going to be a really interesting question.

It depends on who gets there first and what type of business model exists.

So the classic originator today, even if they call themselves a marketplace, their model is, we want to go out and, you know, find you, the borrower. You're the product.

We wrap you in a loan, and then we sell that loan at a markup to the investment side of the universe.

But our strategy is markedly different.

Like, the vast majority of the time that we spend building technology infrastructure, it's actually not for the borrower or for us. It's for the investor.

How do we make the loans that we create easier to understand, easier to trade, easier to trust?

That is, like, a competitive advantage that we have.

Now, how does that mean we monetize this?

Like, well, we want to monetize data analytics, the ability to transact amongst each other in a semi-peer-to-peer fashion, using the blockchain as the core layer of the exchange.

And so we're monetizing the capital-market side.

Like, when it comes to the origination side, our goal is actually, or our business mandate is actually, to commoditize the complement, to increase the GMV and the transaction volumes in this marketplace as much as possible.

Which means we have to basically create this factory that gets loans into the marketplace as cheaply as possible.

Kristin Myers: So, well, thinking about that, so originators join if there's investors. Investors don't join unless they have loans.

Kevin Miao: Right. Exactly.

Kristin Myers: So how is that working right now, sort of bringing both of those sides together, since it's a bit chicken or the egg?

Kevin Miao: Yeah. And so, I mean, I think the way that I've tried to solve this at BlockTower Credit, in general, is, like, be the chicken and the egg.

So we have both, you know, strategic partners on the capital side, as well as great partnerships with affiliate marketplaces like Credible, and soon many others, to connect the two sides.

The borrowers who are looking for, you know, a loan, and then investors who are really motivated to start understanding how this technology is going to, like, change not only how they transact, but the nature of their asset-management business as a whole.

Like, do you actually own an asset if you have to go back to, you know, Wall Street and pay $4 million to securitize it, right?

Like, in the future, it should feel like I'm clicking buttons.

Obviously, there are different roles that Wall Street plays. I mean, I ran those trading desks.

And a big part of that is search and, like, selling the story. That's never going to go away.

But in terms of actually just, like, I want to do this thing, can I press a button and execute it? Like, that doesn't exist anywhere.

And so it's a really interesting greenfield that we're going after.

Kristin Myers: So talk a little bit about where you see Tare then in five years.

And do you think that point about just clicking a button, do you think that that's where modern, you know, private credit is going?

I call it modern, but in five years, what that system could potentially look like.

Kevin Miao: I mean, we already did it in my fund.

We moved $6 billion or $7 billion of USDC volume through our on-chain securitizations. Like, we were well beyond proof of concept.

And so I think the biggest question is, are these funds ready to, like, adapt at all? And really, do they have an incentive?

And from, you know, our conversations, all my former clients, our strategic investors, I know this is top of mind.

But the other side of it is up to us. Can we give them a better carrot, right?

Like, can we actually deliver them something that they care about that helps make them money? Because that's what they care about at the end of the day.

Kristin Myers: Because financial services notoriously move slow.

Kevin Miao: Oh, no doubt.

Kristin Myers: Yeah. When it comes to anything tech-related.

Kevin Miao: One hundred percent.

But I will say today it's a very different environment because the flow of funds navigated through blockchains, thanks to the GENIUS Act in 2024 [spoken year appears incorrect; the GENIUS Act is from 2025], and also, like, again, proofs of concept like my fund in real life.

Or the fact that my co-founder, Lucas, you know, started this company called Centrifuge that now supports billions of dollars of tokenized funds for Apollo and New York Life.

And so we have been at the forefront of bringing on institutional investors into kind of the blockchain ecosystem and making it less scary.

But the reality is, there's no reason to be on the blockchain based on the companies that exist today.

Nobody is providing a service that you couldn't get in the regular world.

And so ultimately, the chicken-and-the-egg situation that we have to solve, but the service we have to deliver for our investors is: We know how to create a high-quality loan that you're already investing in, and we believe we can do it at a much cheaper price for both business and technical innovation, business-model and technical-innovation reasons.

So back us, and we'll prove it.

Kristin Myers: So I want to ask you this question with, like, 10 seconds left, but we've got the big bell right behind us.

When you think about ringing that bell, what do you think about, and when do you think that that might happen?

Kevin Miao: I don't think about it at all.

Like, for me, this is a mission-driven company.

Like, at the end of the day, I lived through the financial crisis. It affected my parents in a deep way and affected everyone that I know in a deep way.

And when you go and you look around at every skyscraper or car, every time you swipe a credit card, there's some version of the Mad Men economy.

Like, you know, dressed like me, like, making a bunch of money, moving and pushing paper around.

That's not going to be how this works 100 years from now, if we have anything to say about it.

Like, it's not going to be how it works five years from now, to answer your actual question from before.

So, you know, I hope we're successful.

We've been backed by, you know, great investors. We have an armada of amazing partners to work with going forward.

But at the end of the day, like, this is a mission-driven company.

If we succeed in what I'm talking about, everything else will take care of itself.

Kristin Myers: I absolutely love that.

Kevin Miao, co-founder and CEO of Tare, thank you so much for joining us today.