Kabbage, the Atlanta-based online small business lender, today (August 3, 2017) announced it has raised $250 million in equity financing from the Japanese technology conglomerate SoftBank Group Corp. According to the announcement, Kabbage has pioneered a financial services data and technology platform to provide automated funding to small businesses in minutes. Kabbage uses data generated through business activity such as accounting data, online sales, shipping and dozens of other sources to understand performance and deliver fast, flexible funding in real time.
Kabbage plans to use the investment SoftBank to expand its lending products for small businesses and will explore non-lending products and services for these customers. The company currently operates in North America and Europe with plans to expand to Asia.“We invested in Kabbage because their unique automated lending platform leverages open data networks and best positions them to empower small businesses around the world,” said SoftBank Managing Director David Thevenon.
Kabbage stats since its launch in 2009
$3.5 billion | Small business loans facilitated
100,000 | Facilitated loans to 100,000+ small businesses, more than any other online small business lender
1.5 million | Maintains 1.5 million live connections to customer data
Kabbage is among a group of young companies that use technology to lower lending costs and offer credit faster than brick-and-mortar institutions. However, according to Reuters, while online lending is expanding, the sector, sometimes called “marketplace lending,” has faced growing pains, including softer institutional investor demand due to concerns about loan quality. This has made it harder for such lenders to raise funding, leading analysts and market participants to suggest the sector might be headed for consolidation. In March, Reuters reported that Kabbage was looking to raise a new round of equity funding for potential consolidation, with listed competitor On Deck being one of its acquisition targets. Kabbage has no “specific plan” to buy On Deck, CEO Frohwein told Reuters. “We look at all sorts of opportunities, but it needs to be in spaces that are not similar or overlapping with what we do.”
Learn more at the SmallBusiness.com Guide to Alternative Funding
Last year, as reported by SmallBusiness.com, Kabbage and other lenders created a trade association that included the development of a new cost transparency self-regulatory measure.