Small-business funding platform Kabbage has been making small inroads in the US over the past couple of years, serving up $500-$40,000 loans to help ‘eBay entrepreneurs’ grow their business.
Indeed, the Atlanta, Georgia-based firm landed a cool $30m itself back in September, to help spread the good word and take its service global. And now, in a week that sees Finovate hit Europe – a 2-day London conference showcasing the future of financial and banking technology – Kabbage is unfurling its funding flag for UK firms, its first foray outside the US.
So far, Kabbage has made 40,000 cash advances in the US, designed as a “quick fix” of sorts for companies needing to meet demand and build their inventory, ramp up personnel, buy equipment and so on.
It’s probably worth noting here, however, that only inventory sold via eBay, Amazon, Yahoo Shopping and Etsy will qualify for funding, OR sties that use storefront tools such as Shopify, Magento and PayPal. The reason? Well, the funding platform taps a range of data sources to determine a business’s performance, including transaction history, customer feedback ratings, and online game-play and social-media participation. Off the back of such information, funding is allocated within seven minutes of submitting an online application.
It’s not entirely obvious from looking at the Kabbage site that these restrictions are in place, and it seems if you have built your own e-commerce website, you’ll not be able to use Kabbage.
“Kabbage is deeply passionate about making funding easy and accessible to all small businesses in order to enable growth,” explains Rob Frohwein, Kabbage Co-Founder and CEO.
“The UK is Europe’s largest e-commerce market, but small businesses there face the same challenge that American businesses face with banks not lending the capital they so desperately need,” he continues. “Given the size and demand of the UK market, it was the natural destination for our first launch overseas.”
In terms of costs, well, the transaction fees can range from 2% to 7% of the loan’s value. If the loan is extended beyond the first month, they then pay interest of 4% a month on the remaining balance. And if they choose to repay it over ten months, the total cost will range from 20% to 25% of the loan amount.
Kabbage is funded by Thomvest Ventures, Mohr Davidow Ventures, BlueRun Ventures and the UPS Strategic Enterprise Fund, with additional investors including Ron Conway’s SV Angel, David Bonderman, founder of TPG Capital, Warren Stephens, CEO of Stephens Inc., Western Technology Investment, H. Barton Asset Management, and TriplePoint Ventures.
During the UK beta phase, users will be able to apply for between £500 and £25,000 in working capital.
Meanwhile, you can monitor all our coverage from Finovate Europe here.
Feature Image Credit – Thinkstock