Kabbage Co-Founders Launch Keep Financial for Employee Retention

Keep Financial, launched by two Kabbage co-founders Kathryn Petralia and Rob Frohwein, is betting on a business model that helps companies attract and retain top talent.

Employers signed up with Keep Financial can regularly distribute a cash bonus to employees as long as they stay on board with the firm for a pre-determined period of time. One example is a $5,000 bonus if an employee stays on for a year, Frohwein said in a Protocol report.

The concept is a mashup that puts the popular compensation vehicle of stock options in reach for smaller firms, albeit in a different manner. Keep Financial enables employers to extend forgivable loans — or what they call “vesting cash plans” — that businesses can offer employees.

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Keep Financial’s vesting cash plans are similar to employer-forgivable loans, which are offered to offset tuition, job equipment expenses or major life purchases. Employer-forgivable loans are usually handled by a bank and typically cover the principal. In some cases, employees are given cash bonuses to help cover the payments.

Licensed as a lender in 46 states, Keep underwrites risk and manages the loan, meaning employers don’t have to apply through a traditional financial institution and track payments, according to the report.

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The business model of employer-forgivable loans was something Frohwein told Protocol he was familiar with early on in his career as a lawyer.

Following Kabbage’s 2020 acquisition by American Express, Frohwein said he was ready for a change. With Petralia, he embarked on a mission to find out what leaders in the human resources sector needed that employer-forgivable loans didn’t bring to the table. They approached that core audience with the idea of Keep Financial.

“They all said, ‘Hey, if this was available to us, we’d do it in a heartbeat. It’s just really hard to execute,’” Frohwein told Protocol. “And I thought, OK, we’ll take all the execution challenges out.’”

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Keep raised $9 million in a seed funding round last month led by Andreessen Horowitz, with participation by Launchpad Capital, Thomvest Ventures, Cambrian Ventures and Worklife Ventures.