Kabbage is a service that enables merchants to get capital to start their own online stores. The idea behind the company was so attractive that they have raised $6.65 million in a new round of funding led by BlueRun Ventures. David Bonderman, Warren Stephens, and the UPS Strategic Enterprise Fund also participated in this round of funding.
Kabbage assesses the merchants’ sales and credit history, customer reviews, prices, and inventory as part of the process to fund them. Kabbage then make cash advances available to eBay and other online marketplaces sellers quickly using PayPal’s Adaptive Payments API.
Kabbage makes money from the fees that they charge to merchants for working capital. The fees depend on how long merchants keep the capital. They are allowed a 6 month maximum to keep it. The rates range from 6-16% of the original advancement amount. Kabbage is now planning on using this funding to expand their model to Amazon.com and Etsy sellers.