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EcommerceBytes-NewsFlash, Number 2610 - August 17, 2011 - ISSN 1539-5065    1 of 3

Kabbage to Expand beyond eBay, Amazon, Yahoo with $17 Million Round

By Ina Steiner
August 17, 2011

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Kabbage raised $17 million in funding to help expand beyond eBay, Amazon and Yahoo Stores. Kabbage provides working capital advances to merchants to help them grow their businesses, and over the next six months, Kabbage will add support for merchants operating on Facebook, Etsy, Shopify and Sears Marketplace.

The company uses automated data sources - including the marketplaces and PayPal - to analyze the health of an online merchant's business, including transaction history, customer traffic and reviews, and products. Chairman and Co-Founder Marc Gorlin said expanding to other marketplaces made sense since many sellers are active on multiple channels. With its release of profile building in May, merchants can now proactively add information to their Kabbage account to immediately increase their access to capital.

Merchants who use Kabbage have 6 months to repay the working capital advance. Rates range between 10% - 18% on the initial advance amount depending on the seller's credit history and store performance and if the seller keeps the advance for the full 6 months. If they pay it off early, they pay less.

Gorlin said he could not provide default rates, but said, "We are very pleasantly surprised with the results. Our customers have been performing excellently." Small and medium businesses are deeply thirsty for capital, he said.

Kabbage had secured $6.65 million in January. Gorlin said the company, which now has 22 employees, had not been looking to raise additional capital, but investors approached Kabbage and they found a partner they liked.

The Series B funding round was led by Mohr Davidow Ventures. Existing investors participating in the round include BlueRun Ventures, David Bonderman, founder of TPG Capital, Warren Stephens, CEO of Stephens Inc., and the UPS Strategic Enterprise Fund. Several individuals also participated in the round, including Jim McKelvey, co-founder of Square.

In other news, Kabbage said the U.S. Patent & Trademark Office recently granted it U.S. Patent No. 7,983,951 ("Apparatus to provide liquid funds in the online auction and marketplace environment").

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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