Atlanta-based startup Kabbage has raised $6.65 million in new funding led by BlueRun Ventures with David Bonderman, founder of TPG Capital; Warren Stephens, CEO of Stephens Inc.; and the UPS Strategic Enterprise Fund participating in the round.
Kabbage is essentially a way for online merchants and sellers on marketplaces like eBay to get capital they otherwise wouldn’t qualify for at a bank. Kabbage uses technology to analyze online merchants’ sales and credit history; customer traffic and reviews; and prices and inventory compared to competitors. Via PayPal’s Adaptive Payments API, Kabbage will make cash advances available to eBay and other online marketplace sellers fairly quickly (Kabbage says that many transactions take as little has ten minutes).
Kabbage makes money off of fees charged to merchants for the working capital. Fees depend on how long the online merchant keeps the capital (6 month maximum) and the customer’s repayment risk. Rates range from 6 percent to 16 percent of the original advance amount.
While the startup only supports eBay for now (via a recently launched deal with PayPal), Kabbage plans to use to the funding to expand to other platforms, including Amazon and Etsy.
Kabbage, Inc. is the leading online provider of working capital for small businesses. Kabbage provides financing to sellers, leveraging information generally available from online marketplaces and other off-line sources to assess risk and help determine advance amounts and related fees and interest. There is a rapidly growing delta between small-to-medium businesses’ need for credit and its availability from traditional sources. For the large and growing segment of online retailers who offer their products via online marketplaces, representing...
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