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Posts Tagged ‘Kathryn Petralia’

Engaged social media fans may help e-merchants get capital

Tuesday, September 20th, 2011

KabbageIf you’re an e-commerce retailer with lots of engaged fans on Facebook, Twitter, or other social media networks, now it could help you qualify for a capital advance in this lending-challenged economy.

Kabbage Inc., a provider of working capital for online merchants, is offering Social Klimbing, which gives small businesses additional access to capital based on social network activity. Today’s announcement represents the first time a financial services company has provided benefits to its customers as a result of Facebook fan pages and Twitter feeds.

“Kabbage is the only company providing working capital to companies based on social media activity and utilization,” said Kathryn Petralia, Kabbage co-founder and COO.

“With Social Klimbing, small businesses can – for the first time – benefit from maintaining and growing relationships with their customers through Facebook and Twitter.  While other companies are ‘talking’ about customer engagement, Kabbage is actually quantifying and utilizing it as a means to give small businesses more capital to grow.”

To date, Kabbage has leveraged marketplace data, such as seller ratings for online merchants, to underwrite its business customers. With Social Klimbing, Kabbage can now reward businesses that leverage social media to attract, interact with and retain customers.

Social Klimbing allows customers to connect their Kabbage accounts to existing or new Facebook fan pages and Twitter feeds, which is immediately analyzed and translated into additional capital. As customers increase followers, activities and chatter on Twitter and Facebook, they will automatically gain access to more funds.

Kabbage, Inc., headquartered in Atlanta, Georgia, is pioneering the first financial services data, technology and marketing platform just for online merchants, supporting millions of small and medium businesses that make a living selling online. The company presented at TechMedia’s Southeast Venture Conference and recently raised funding itself.

Kabbage leverages data generated through merchant activity across various marketplaces and channels to understand business performance and craft financing options that meet their needs.

Kabbage is venture funded and backed by Mohr Davidow Ventures and BlueRun Ventures, with additional investors including: David Bonderman, founder of TPG Capital, Warren Stephens, CEO of Stephens Inc., and the UPS Strategic Enterprise Fund.


Kabbage feeds capital to online sellers

Friday, February 4th, 2011

By Allan Maurer

Kabbage, ( which just planted $6.65 million led by BlueRun Ventures in the bank, is a company with one of those innovative ideas that could not have happened at a better time. The company makes working capital advances via PayPal to qualified online sellers.


Marc Gorlin, chairman of Kabbage, at the 2010 Internet Summit in Raleigh, NC

“There is no faster way to raise working capital on the planet,” says Chairman Marc Gorlin. Out of Beta for a short time, Kabbage has doubled the number of clients it had previously.

It has been making advances of from $2,000 to $12,000 and is going to move up to advances of $25,000 to $40,000 over time, says Gorlin. “If they can get access to capital, they can truly grow their business.”

The alternative method of raising capital offers online sellers another option in one of the worst climates for obtaining small business credit from banks in history.


Kabbage co-founder and COO Kathryn Petralia on the motorized beer cooler the company won at a PayPal X developer conference

This Internet thing is just a fad

“Take a company like Zappos,” says Gorlin. “They were doing $50 million in revenue before they got their first credit line from a bank. Many local companies doing $5 million or $6 million can’t get credit. A company in Minnesota referred to us was selling hardware and had a run rate of $4 million a year from online sales. They went to a bank for money to expand. The bank told them this whole Internet thing is just a fad – and that was this year.”

While traditional bankers want to walk wooden floors and see actual customers, Gorlin points out that “There is actually a ton more data online.”

Using that data, Kabbage qualifies sellers in a matter of minutes from about 200 data points in PayPal and eBay – how long a store has been online, it’s seller rating (which indicates how well they treat their customers), PayPal charge backs, volume of sales and much more. Kabbage has made advances to companies selling everything from American Indian jewelry to model trains, plus size men’s clothing, odd sized men’s shoes, china, and collectibles. “It’s a diverse list,” says Gorlin.

The companies agree to paying back one-sixth of the advance each month via PayPal and can pre-pay with no penalty. Kabbage makes from 6 percent to 16 percent of the advanced amount in fees depending on the firm’s credit history and volume. Down the road, Gorlin sees the possibility of giving online sellers a “Kabbage score” based on its data and increasingly sophisticated analytics. It can, for instance, tell over time which data points may be most predictive of small business success online.


Robert Frohwein, CEO of Kabbage, has been CEO of LAVA Group Inc., an intellectual property investment bank, a founder and the managing partner of Sentry Law Group, and founder of MediaWheel

Hold it while we check your Kabbage score

Banks may eventually use the Kabbage score to open up their own loan coffers, Gorlin suggests. “We could be the means by which banks get more money to small businesses by automating the process for them,” Gorlin notes.

Data analysis Kabbage has done for its own customers shows that “Margins for online businesses are stout. A lot of them won’t sell things for less than a 100 percent margin, they are not paying rent on a store, they don’t have shelf space to fill or need people to talk to customers. They do have different fees on PayPal and eBay, but by and large, the customers we see are running high margin businesses.”

Founded in late 2008 by Gorlin, CEO Rob Frohwein, and Kathryn Petralia, COO, the company attracted high profile investors who include  David Bonderman, founder of TPG Capital, Warren Stephens, CEO of Stephens Inc., and the UPS Strategic Enterprise Fund, in addition to BlueRun. The company says the funding will let it expand its financing service beyond eBay merchants to marketplaces such as Amazon, Etsy, Overstock and so on.

Talking to Gorlin, you can tell he gets a kick out of helping small businesses while building his own. Kabbage itself still has a classic startup culture, says Gorlin, a serial entrepreneur who was a co-founder of Pretty Good Privacy (NYSE:MFE), Vertical One Corp. and the Lanta Technology Group.

Startup culture, he says, “Is something you can’t recreate in a big company. You work the number of hours you do to create something out of nothing and you have to burn off some steam.”


So, there are nerf guns. Oh yes, and there is the motorized beer cooler. Kabbage won it as the audience choice prize at a PayPal X developer conference in San Francisco. “I guess you could put something besides beer in it,” says Gorlin, “but I wouldn’t know why.”

On the heels of its funding, Kabbage has already selected larger new offices in Atlanta and will be hiring. It currently employs eight people and expects to hit 15 or so in the next 60 to 90 days. But if you’re going by, watch out for the nerf guns.

Reprinted from our sister publication,