Kabbage

Kabbage was a fintech company that provided automated cash flow solutions and loans to small businesses.²¹² American Express acquired most of Kabbage in 2020, excluding its pre-existing loan portfolio.¹² The remaining entity, KServicing Wind Down Corp., filed for Chapter 11 bankruptcy in 2022.¹⁵

Timeline

Money raised

Kabbage raised a Series A round of $8.8 million in February 2011.¹² Kabbage raised a Series B round of $17 million in August 2011.¹² Kabbage raised a Series C round of $30 million in September 2012.¹² Kabbage raised $75 million in debt financing in April 2013.⁹ Kabbage raised $270 million in debt financing led by Guggenheim Securities in April 2014.⁹ Kabbage raised a Series D round of $50 million led by SoftBank Group in May 2014.⁹ Kabbage raised a Series E round of $135 million led by Reverence Capital Partners in September 2015, at a valuation of $1 billion.⁹¹¹¹⁴ Kabbage raised $500 million in debt financing in March 2017.⁹ Kabbage raised a Series F round of $250 million led by SoftBank Vision Fund in August 2017, at a valuation of $1.2 billion.⁹ Kabbage raised $200 million in debt financing led by Credit Suisse in November 2017.⁹ Kabbage raised $700 million in debt financing in April 2019.⁹ Kabbage raised $200 million in debt financing in July 2019.⁹ Kabbage's total funding was $2.38 billion, according to Clay.⁹

Investors named in the sources: SoftBank Vision Fund⁹, SoftBank Group⁹, Reverence Capital Partners⁹¹¹, Guggenheim Securities⁹, Credit Suisse⁹, BlueRun Ventures⁹¹², Mohr Davidow Ventures⁹¹², Thomvest Ventures¹², UPS Strategic Enterprise Fund¹², ING Bank¹¹¹², Santander InnoVentures¹¹¹², Scotiabank Global Banking & Markets¹¹¹².

What happened

Kabbage was founded in 2009.¹² Kabbage developed a data and technology platform to provide small businesses with automated cash flow solutions.¹² Kabbage used machine learning algorithms to assess and loan money to small business owners.² Kabbage tapped a wide variety of sources, from traditional accounting statements to social media signals, into its proprietary machine learning algorithms to determine loan eligibility.² Kabbage offered its product as a white-label service to other loan providers.²

Kabbage raised $8.8 million in Series A funding in February 2011.¹² Kabbage raised $17 million in Series B funding in August 2011.¹² Kabbage raised $30 million in Series C funding in September 2012.¹² Kabbage raised $75 million in debt financing in April 2013.⁹ Kabbage raised $270 million in debt financing led by Guggenheim Securities in April 2014.⁹

Kabbage raised a $50 million Series D round led by SoftBank Group in May 2014.⁹ Kabbage raised a $135 million Series E round led by Reverence Capital Partners in September 2015, reaching a $1 billion valuation.⁹¹¹¹⁴ Kabbage expanded its credit facility to $900 million in October 2015.¹¹ Kabbage raised $500 million in debt financing in March 2017.⁹ Kabbage raised a $250 million Series F round led by SoftBank Vision Fund in August 2017, at a $1.2 billion valuation.⁹

Kabbage raised $200 million in debt financing led by Credit Suisse in November 2017.⁹ Kabbage raised $700 million in debt financing in April 2019.⁹ Kabbage raised $200 million in debt financing in July 2019.⁹ Kabbage had raised nearly $990 million in debt and equity by August 2020.² Kabbage was valued at over $1.2 billion in its last equity round in 2017.²

Kabbage was on pace to loan out between $2.5 billion and $3 billion in 2019.² In March 2020, Kabbage stopped originating loans for its Celtic Bank partnership as COVID-19 shut down businesses.⁴ In late March 2020, Kabbage furloughed a significant number of its 500 employees and shut down its Bangalore office.⁶ In April 2020, Kabbage abruptly shut down its credit lines for SMBs.² On August 17, 2020, American Express announced it would acquire most of Kabbage, excluding its pre-existing loan portfolio.¹²

The acquisition included employees, technology, and financial data, but not Kabbage's pre-existing loan portfolio.² A separate entity was to manage and service the pre-existing loans at the time of close.² American Express completed the acquisition of Kabbage on October 16, 2020.¹² The Kabbage brand was retired with the launch of American Express Business Blueprint.¹³ Kabbage Inc. (d/b/a KServicing) filed for Chapter 11 bankruptcy in Delaware on October 3, 2022.¹⁵

Kabbage sought to wind down and liquidate the portions of its business not purchased by American Express.¹⁵ Kabbage received court approval for a $58 million settlement with Customers Bank on November 7, 2022.¹⁵ Kabbage's Chapter 11 plan was approved by the bankruptcy court on March 13, 2023.¹⁵ The bankruptcy estate sued American Express and Kabbage's former directors and shareholders in an attempt to claw back $746 million transferred in the 2020 merger.¹⁵

Legal outcomes

• filedThe bankruptcy estate sued American Express and Kabbage's former directors and shareholders to claw back $746 million transferred in the 2020 merger.¹⁵
• settledKabbage reached a $58 million settlement with Customers Bank over PPP loan disputes.¹⁵

Where the founders are now

Rob Frohwein was Kabbage's CEO and co-founder.² Kathryn Petralia was a co-founder of Kabbage.⁵ Rob Frohwein posted on LinkedIn that the Kabbage brand was fully integrated with Amex and he had been gone for over a year.¹³

Sources

1. AmEx Buys Kabbage in SMB Solutions Move, cfo.com, Aug 18, 20
2. Amex acquires SoftBank-backed Kabbage after tough 2020 for the SMB lender | TechCrunch, TechCrunch, 2020-08-17
4. Kabbage Considers a Sale. It's Expected to Seek Up to $1 ..., barrons.com, Aug 3, 202
5. Ep. 20 - Kathryn Petralia and Rob Frohwein, Founders of ..., atlantastartuppodcast.com, May 11, 20
6. Kabbage Startup Layoffs - Layoffs.fyi, Layoffs.fyi, May 11, 20
9. How Much Did Kabbage Raise? Funding & Key Investors | Clay, clay.com
11. Loan Platform Kabbage Raises $135M At A $1B Valuation, Grows Credit Line to $900M | TechCrunch, TechCrunch, 2015-10-14
12. Kabbage IPO Timeline and Financing Details - Forge, forgeglobal.com
13. Kabbage Archives - Finovate, Finovate
14. Alternative-Lending Company Kabbage Valued at $1 ..., blogs.wsj.com, Oct 14, 20
15. KServicing Wind Down Corp., law360.com

How this case file was put together

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