Kabbage: Making Capitalization Within Reach for Small Businesses

Kabbage Inc. is an American financing corporation that offers financing packages online. Based in Atlanta, Georgia, Kabbage works with some of the largest ecommerce sites in the world including Amazon, eBay, Yahoo! Store, Shopify, and Etsy in order to extend capitalization to small businesses. At present, Kabbage is serving about 30,000 clients, 80% of which are repeat customers.

Kabbage offers advances ranging from $500 to $50,000, depending on certain data factors. Before extending financing services, Kabbage considers seller’s rating, volume of transaction, time in business, credit rating, and activity on social media. Most of its clients use their advances from the company in purchasing inventory, marketing and upgrading of systems. It has created its own scoring system through the Social Klimbing. Social Klimbing scores Kabbage’s customers like social media credit scoring.

In its last round of fund raising activities, Kabbage was able to gather financial backing of $56 million. Venture funds were poured in by BlueRun Ventures and Mohr Davidow Ventures while debt funds were provided by Western Technology Investment. Other investors included David Bonderman, Warren Stephens, Jim McKelvey, TriplePoint Ventures, and UPS Strategic Enterprise Fund.

The leading courier UPS is helping Kabbage in its shipping requirements through an agreement that both companies forged in February 2012. The partnership allowed Kabbage to obtain a bird’s-eye-view of the volume of its customers’ businesses. For Kabbage, the more capital its customers avail, the lower the rates would be.

Kabbage became the Red Herring 100 North American Winner in May 2012. This award recognizes the leading private companies in America. The award is given to companies with long term and sustainable innovations and has the potential to grow big in the future. But Kabbage’s most prestigious recognition was its inclusion in Fast Company’s Top Ten Most Innovative Companies in the field of finances in February 2013, along with Square and PayPal.