January 14, 2011
By the ZippyCart Shopping Cart Reviews Content Team
Kabbage Inc., a provider of working capital advances for eBay merchants, recently locked down $6.65 million in Series A Funding led by BlueRun Ventures, in association with founder of TPG Capital, David Bonderman; Stephens Inc. CEO, Warren Stephens; and the UPS Strategic Enterprise Fund.
“The eBay merchants we currently serve use Kabbage working capital to grow their businesses by acquiring inventory, hiring employees, advertising, and purchasing equipment and technology,” said Kabbage CEO Robert Frohwein. “This round of funding will enable us to expand operations into additional marketplaces, such as Amazon, Etsy, Overstock, etc., helping small businesses to further boost today’s economy.”
Considered a heaven sent by some, Kabbage offers an alternative, traditional means of borrowing such as bank lending. The company will advance up to $12,000 to eBay sellers strapped for cash to acquire inventory. In addition to looking at credit score, Kabbage takes a potential borrower’s seller rating, time in business, transaction volume and other feedback measurements into consideration.
In as little as 10 minutes, advances can be transferred to a seller’s PayPal account, says Kabbage, and repayments can automatically be deducted from the same account each month. Kabbage charges a flat rater per $100 advanced for the first 30 days, after which the company charges additional flat rates for each sequential month based on the amount borrowed. The maximum before one must repay the advance is six months.
“There are articles every day on how difficult it is for small businesses to get capital right now. To get them money via PayPal in less than ten minutes is unlike anything else out there today. Banks can’t do it,” said Kabbage Chairman and co-founder Marc Gorlin.
To keep investors (as well as potential borrowers) looking in their direction, Kabbage likes to expand and maintain connections through various marketplaces and other online sources. Recently the company guest blogged on ZippyCart and gave online merchants tips on how to spend a cash infusion wisely.
Kabbage has already begun to spend their newly found capital by expanding into new offices in Atlanta and starting to hiring new staff. The company currently employs eight people and expects to progress to at least 15 within the next 60 to 90 days.