Merchant-lending startup Kabbage Inc., which advances as much as $12,000 to EBay Inc. sellers to buy inventory, raised $6.7 million in venture funding from investors including TPG Capital’s David Bonderman and Warren Stephens of Stephens Inc.
The round of capital, led by BlueRun Ventures with money from United Parcel Service Inc., will be used to expand Atlanta- based Kabbage into marketplaces such as Amazon.com Inc. and Overstock.com Inc., develop software and hire more people, founder and Chief Executive Officer Rob Frohwein said.
Kabbage, which takes its name from a slang expression for money, targets sellers with annual sales of $15,000 to $3 million who are overlooked or rejected by traditional lenders because of their credit scores or lack of collateral.
Stephens, the CEO and owner of Little Rock, Arkansas-based Stephens Inc., said he invested because retailers and merchants need more access to capital.
Kabbage “doesn’t have to dominate a big segment of the market to make the company really successful,” Stephens said in a telephone interview. “It’s very targeted and there’s tons of people in it and if they get just a meaningful share of the market, the company will do very well.”
Stephens was connected to Kabbage through co-founder and Chairman Marc Gorlin, whom he’s known for several years. Stephens also was an investor in a previous company Gorlin co- founded called VerticalOne.
Bonderman, the billionaire who runs Fort Worth, Texas-based TPG Capital, has known Gorlin for years through family connections and past business deals, Gorlin said. Kabbage approached him about a possible investment and he agreed, Gorlin said.