Catching Up With Cash-Infused Kabbage

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If you own a small business and want a modestly sized loan, what do you do?

It’s sounds simple, but that’s the essential question lending startup Kabbage aims to answer. The winner of PYMNTS.com’s Most Innovative award, Kabbage provides working capital to small businesses in increments not offered by larger banks.

Kathryn Petralia, Kabbage’s co-founder and chief operating officer, estimates that most of the loans Kabbage gives out are between $8-10,000, although they can range from $500 to $50,000.

Market Platform Dynamics’ Karen Webster caught up with Petralia to discuss the company’s recent $30 million fundraising round, how the economy affects the loan industry and Kabbage’s global ambitions.

According to Petralia, Kabbage is, at its core, a technologies company, with over half of its 70 employees working in technology development. Technology is the cornerstone of Kabbage’s business because the information the company gleans from such advances is what allows them to decide which small businesses are best suited to receive loans.

“Anywhere a business interacts with the web, whether because they’re accepting an electronic payment, or because they use QuickBook, or they ship with UPS, or they sell online … if we can collect that data and use it, then we can make [the process] more efficient,” Petralia said.

One of the more interesting way Kabbage uses technology to acquire data is through its social media analysis. Yes, Kabbage judges how active a potential client is on Facebook, Twitter and other social media sites as part of its evaluation process. Petralia says they’ve found the more social-savvy companies to be the better investments.

“Maybe these merchants who use these services the most actively are more actively engaged in their business, and so that may be a good indicator of business performance,” Petralia said.

“The line between commerce and eCommerce is blurred. We think it’s just commerce.”

To hear more Webster and Petralia on the impact Kabbage has had on the small business lenders market, listen to the podcast below.

Kathryn Petralia
Co-founder and COO, Kabbage

Kathryn has spent the past 17 years working with both startups and established companies focused on credit, payments, technology and ecommerce. Kathryn started Kabbage along with her two co-founders in late 2008, and it has grown from 3 employees and a Power Point to 46 employees and over twenty thousand customers in three years. Prior to Kabbage, Kathryn was with Revolution Money, an Internet-based credit card startup based in St. Petersburg, Florida, where she was Vice President of Strategy. Before Revolution, Kathryn was a corporate development executive with CompuCredit Corporation, where she was responsible for entering new markets, product development initiatives, as well as the establishment of multiple strategic alliances. Kathryn was also one of the founders of WorthKnowing.com, a consumer financial services portal whose IP was later sold to CompuCredit and TransUnion. She holds a B.A. in English Literature from Furman University.