Kabbage Gets Funding, Patent

Milestones validate small-business lender's alternative approach.

by Auctiva.com staff writer
- Aug 17, 2011

Kabbage Inc., which provides working-capital advances to online sellers, has received a little working capital of its own.

The Atlanta-based company announced it has secured $17 million in Series B venture funding, bringing its total capital raised this year to $23.65 million. At the same time, Kabbage has received its first technology patent, further validating its model for helping e-merchants quickly get financing.

Currently, the company provides short-term cash advances to merchants selling on eBay, Amazon and Yahoo. With the infusion of cash, Kabbage plans to also address those operating on Facebook, Etsy, Shopify and Sears.com.

"Although small business fuels the majority of growth in the U.S., it is extremely difficult and time consuming for these businesses to apply for small-business loans, not to mention actually getting access to funds from a traditional bank," says Rob Frohwein, Kabbage's founder and CEO. "Kabbage fills this need by providing money to these businesses in a quick, easy and painless way, helping them to further grow their businesses and boost the economy."

Unlike traditional small-business lenders, Kabbage takes into account a seller's business history, traffic, reviews and products. Once approved for a cash advance, sellers receive the funds right away—often within minutes of applying.

Kabbage's first patent covers this unique approach, and is one of many "foundational patents" the company expects to receive over the next nine months. Known as "Apparatus to provide liquid funds in the online auction and marketplace environment," the patent describes an online lending system that uses a merchant's sales history as a factor in their credit-worthiness.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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