Venture-backed Kabbage looks for funding but no IPO: sources

Kabbage Inc, an alternative lender, is looking to raise capital, three banking and private equity sources said.

How much Kabbage is seeking is unclear. The capital could come in the form of a private placement or sale, or the company may raise another round of funding, sources said.

“Kabbage is not raising another round of funding,” a spokeswoman said in an emailed response to questions.

Launched in 2011, Atlanta-based Kabbage provides lines of credit of as much as $100,000 to small and medium-sized businesses. It also offers personal loans of as much as $35,000 for consumers.

Kabbage has raised five rounds of funding, or more than $240 million in equity. The most recent round, a Series E, produced $135 million in October. In 2014, Kabbage closed a $50 million Series D round led by SoftBank Capital and a three-year, $270 million credit facility from Guggenheim Securities.

Investors include Reverence Capital Partners; SoftBank; Thomvest Ventures; Mohr Davidow Ventures; BlueRun Ventures; UPS Strategic Enterprise Fund; ING; Santander InnoVentures; TCW/Craton; Ron Conway’s SV Angel; David Bonderman, founder of TPG Capital; and Warren Stephens, CEO of Stephens Inc.

Kabbage said in October that it provides more than $1 billion annually to small businesses and consumers. “There is lots of online lender demand for [Kabbage] products, but banks aren’t securitizing the loans as much,” one source said.

Kabbage is considered pre-IPO but the company is not expected to go public. Sources pointed to the poor performances of rivals Lending Club and On Deck Capital in the aftermarket.

Lending Club, once a high-flyer among alternative lenders, has seen its stock plunge 63 percent since it went public in December 2014 at $15 a share. On Monday, Lending Club’s shares traded at $5.51. (Lending Club stumbled in May when it ousted its CEO after an internal probe found the company had falsified documentation when selling $22 million of loans to an investor, Reuters reported.)

On Deck’s stock plunged 68 percent since it went public in late 2014. “Nobody in that sector is going public that is a U.S. company,” a second source, one of the three, said.

Sources also pointed to the lack of IPOs this year. Only three VC-backed IPOs debuted on U.S. exchanges in July, compared with six in June, VCJ reported. “The comps in the public market are not good for an IPO,” the second source said.

Executives for Stephens and Guggenheim declined comment. Reverence, Thomvest, BlueRun, UPS, Santander and Bonderman could not be reached for comment.

Action Item: Contact Kabbage: +1 888-986-8263

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