UPS Fronts Working Capital to E-Commerce Merchants
Kabbage, a start-up that provides American online retailers with working capital, has gotten a new debt facility from UPS Capital, the logistics giant’s VC arm, to help with its cash advances. It did not say how much.
USPS is already one of the start-up’s venture backers.
UPS wants the encrypted shipping history of e-merchants in exchange for the possibility of otherwise-hard-to-get money at lower rates. The data, including the merchant’s Twitter following and Facebook fans, would be forwarded via Kabbage.com. It would let UPS pick off any plum accounts to support.
According the Kabbage web site advances of up to $40,000 – it insists their not loans – can be had in 10 minutes to buy inventory or equipment or hire staff for a fee of 2%-7% based on the store’s monthly revenue and credit quality.
The way UPS couches it, “Access to working capital for small businesses is fundamental to the country’s economic recovery. This alliance with Kabbage is an example of how UPS and UPS Capital can help small businesses gain access to the working capital they need to grow their business. We’re looking forward to extending our alliance with Kabbage and the thousands of e-commerce companies it supports.”
“The relationship between Kabbage and UPS,” it said, “is truly innovative and will enable Kabbage to potentially increase working capital lines when businesses choose to share their UPS transaction data, which includes information related to the number and frequency of packages shipped.”
Kabbage officially launched in October of 2010 and claims to have become a “critical piece of the operational puzzle for many online merchants who sell on marketplaces like eBay, Amazon, Yahoo Stores and Etsy as well as operate their own independent online stores.”
It says over 15,000 online merchants have turned to it for the working capital they need to grow their businesses.
Headquartered in Atlanta, Kabbage has pioneered what it says is the first financial services data, technology and marketing platform for the millions of SMBs that make a living selling online. It leverages data generated through merchant activity across various marketplaces and channels to understand business performance and craft financing options that meet their needs.
Besides the UPS Strategic Enterprise Fund, Kabbage is 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 TriplePoint Ventures.
Among his other credits, CEO Rob Frohwein was CEO of the Lava Group, an intellectual property investment bank, and VP of strategic alliances and general counsel of Security First Network Bank (SFNB), the first Internet bank.
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