Whatever Happened To...

Whatever Happened To…Kabbage


Cruciferous vegetables are hearty and packed full of fiber and vitamins. So when your financial tech company shares a similar name with the cabbage variety, you know there are many layers involved.

Kabbage is one of the dozens of financial firms built in the wake of the economic downturn, at the same time that PYMNTS launched. The year was 2009, and it was rough for some, but a fertile ground for others.

“I think it was a real advantage to us to start during an economic downturn,” says Kathryn Petralia, a co-founder and Head of Operations at Kabbage. “It gave us the ability to handle adversity and deal with change and I think it allowed us to really focus on being nimble and flexible.”

Kabbage is a data and technology platform that enables real-time lending. To date, the business has provided over $2.5 billion to small businesses in the U.S. and also abroad through international partnerships.

Seven years ago, Petralia and her two partners Rob Frohwein and Marc Gorlin started Kabbage to help small businesses get funding to launch, no matter how small. The business made its first loans in May 2011, and now there are now about 335 employees in four locations including the U.K., which was added in 2013.

“We started the company initially to provide small business loans to eBay sellers through a real-time technology platform,” says Petralia. “Our focus has always been on user experience and for them to get capital in less than ten minutes. Over the last seven years we’ve grown to give loans to a wider range of businesses.”

Kabbage is venture funded and backed by a slew of entities investing more than $238.65 million to date, after five rounds and 17 investors. The most recent funding came in October 2015, bringing $135 million in a Series E.

“Founding when we did gave us flexibility on the funding side and taught us how to address a diversity of options and not be captive to just one particular partner,” says Petralia.

The goal of all that money is, of course, to lend to small business owners.

Kabbage offers a variety of loans up to $100,000 with types scaling from SBA and Small Business Credit Cards, to Online and Peer-to-Peer, to Equipment and Inventory, to Payroll and Professional Loans. Fees range from 1.5 percent to 12 percent depending on the chosen loan and length. The site even allows loan applicants to toggle around with what costs look like with its Loan Estimator and possible Payment Schedule. Testimonials from small business owners pepper the website, glorifying how Kabbage has helped launch their “American Dream.”

The company has been pinned to top lists on Forbes, Fast Company, Inc 500 and most recently CNBC’s disrupter list. It’s evolved its product list to include the ‘Kabbage Card’ and ‘Karrot Personal Loans.’

But starting a business — big or small — does not come without some battle wounds of some sort. While helping start others dreams through loans, Petralia and her Kabbage partners have incurred some bruising of their own.

Petralia remembers back to 2009 when the team was looking for a bank partnership. In a highly regulated sector, regulations are ever-evolving, which can implicate, limit and change relationships. Kabbage had been talking with Thrift, when regulations involving OTC caused an abrupt shift.

“[The government] shut down those types of bank partnerships so we quickly changed to cash advance products, which remained in place until 2014 when we launched our partnership with Celtic Bank today,” says Petralia. “That was a challenge that it was definitely unexpected where we had to come up with an alternative and now we’re happy to be working with an FDIC regulated bank.”

Petralia says there have been many more rewarding moments than the hurdles — which she calls “Kind of little pebbles across your path every step of the way” — that any startup has.

As for the future, Kabbage seems to have options ripe for the picking. Seven years into growing roots, the business has eyes on growth Stateside, but even more so abroad.

“I think you’re going to see a lot of international growth and large bank partners like the ones we already have,” says Petralia. “You’ll also see enhanced focus on data and analytics for our customers and the banks that we partner with.”



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