[JayBallentine]

Kabbage, A Loan Platform For Small Merchants, Gets $270M Credit Facility On ‘Dramatic’ Growth

Here's what I take from this - based on my knowledge of how tech companies operate.

1. They have proven that you can underwrite and fund a deal without dealing with a human.
2. They have proven to their investors that they can make money doing it.
3. Once the well becomes dry on the "premium" side of MCA - they will look to do the same for "sub prime" MCA. They will have to continue growing, and the margins on "sub prime" are higher than their current business.

Context: THEY HAVE RAISED THE LARGEST CREDIT FACILITY IN THE HISTORY OF ALTERNATIVE BUSINESS LENDING. You don't raise $270 million without proving that you can "automagically" fund deals without requiring a "human touch."

You should also be aware that they are learning from each decline (they grab that bank data). I wouldn't be surprised if they started very quietly piloting a 500 FICO program under the radar using this facility... Maybe do 50 - 100 $25k deals to test things out...

The future of cash advance is happening. I'm excited to be along for the ride!

[aak723]

Kabbage, A Loan Platform For Small Merchants, Gets $270M Credit Facility On ‘Dramatic’ Growth

Here's what I take from this - based on my knowledge of how tech companies operate.

1. They have proven that you can underwrite and fund a deal without dealing with a human.
2. They have proven to their investors that they can make money doing it.
3. Once the well becomes dry on the "premium" side of MCA - they will look to do the same for "sub prime" MCA. They will have to continue growing, and the margins on "sub prime" are higher than their current business.

Context: THEY HAVE RAISED THE LARGEST CREDIT FACILITY IN THE HISTORY OF ALTERNATIVE BUSINESS LENDING. You don't raise $270 million without proving that you can "automagically" fund deals without requiring a "human touch."

You should also be aware that they are learning from each decline (they grab that bank data). I wouldn't be surprised if they started very quietly piloting a 500 FICO program under the radar using this facility... Maybe do 50 - 100 $25k deals to test things out...

The future of cash advance is happening. I'm excited to be along for the ride!

So you're saying the retail broker is dead, yet shamelessly marketing your direct mail methods aimed at the retail broker? man, you're a trip -- are you for real?

[Chambo]

Kabbage, A Loan Platform For Small Merchants, Gets $270M Credit Facility On ‘Dramatic’ Growth

Here's what I take from this - based on my knowledge of how tech companies operate.

1. They have proven that you can underwrite and fund a deal without dealing with a human.
2. They have proven to their investors that they can make money doing it.
3. Once the well becomes dry on the "premium" side of MCA - they will look to do the same for "sub prime" MCA. They will have to continue growing, and the margins on "sub prime" are higher than their current business.

Context: THEY HAVE RAISED THE LARGEST CREDIT FACILITY IN THE HISTORY OF ALTERNATIVE BUSINESS LENDING. You don't raise $270 million without proving that you can "automagically" fund deals without requiring a "human touch."

You should also be aware that they are learning from each decline (they grab that bank data). I wouldn't be surprised if they started very quietly piloting a 500 FICO program under the radar using this facility... Maybe do 50 - 100 $25k deals to test things out...

The future of cash advance is happening. I'm excited to be along for the ride!

I highly doubt, in fact I would put money on it, that they are NOT making any money off the advance sector yet. WAY, WAY too soon to be seeing profits on two year deals.

VC's aren't concerning themselves with profits for now anyway, they never do when it comes to internet based companies and start ups

[MCNetwork]

Once Kabbage's portfolio gets burned from doing instant underwriting on high risk merchants, they'll be out of that customer segment REALLY quick! Or their loan approval rates will become incredibly low. Either way, there are more than enough high risk merchants to keep us brokers in business!

[Chambo]

So you're saying the retail broker is dead, yet shamelessly marketing your direct mail methods aimed at the retail broker? man, you're a trip -- are you for real?

What is being inferred is the days of the retail broker are shifting...and more rapidly than originally forecast

How long did everyone think rapid merchants with unreasonable fees was going to last? How long did you think merchants and the funds that risk the money would put up with that behavior?

[JayBallentine]

So you're saying the retail broker is dead, yet shamelessly marketing your direct mail methods aimed at the retail broker? man, you're a trip -- are you for real?

I was offering free advice. I run a tech start up. Not a marketing / direct mail firm.

I highly doubt, in fact I would put money on it, that they are NOT making any money off the advance sector yet. WAY, WAY too soon to be seeing profits on two year deals.

VC's aren't concerning themselves with profits for now anyway, they never do when it comes to internet based companies and start ups

I have to double check, but I don't think there is VC money in this round. I think it's all institutional capital. Could be wrong - but I think that's the case.

[aak723]

What is being inferred is the days of the retail broker are shifting...and more rapidly than originally forecast

How long did everyone think rapid merchants with unreasonable fees was going to last? How long did you think merchants and the funds that risk the money would put up with that behavior?

Have you tried funding anything with Kabbage? They can't fund anyone where they can't verify deposit sources. So any merchant who gets cash payments from vendors, or even wire transfers, can't get money at this point.

[JayBallentine]

VC's aren't concerning themselves with profits for now anyway, they never do when it comes to internet based companies and start ups

$53.5 Million in VC.
$360 Million to date in debt. Which includes today's $270 Million.

I wonder how cheap or expensive the money is to them... Structure would be good to know too.