American Express has acquired small business loan platform Kabbage in a deal that will see the payment giant gobble up the Covid-19 beleaguered FinTech’s team, solutions and IP.
Kabbage has established itself as a tool for small businesses to get access to flexible credit lines, inline bill payment, cash flow visualisation tools, e-gift certificates and the ability to centralise funds through the company’s recently launched business checking account.
The acquisition is expected to close later this year, subject to customary closing conditions. No details about how much American Express will pay for the startup were revealed.
However, Kabbage was valued at $1.2bn back in 2017 when a SoftBank-led funding round injected $250m into the unicorn.
Since then Kabbage has run into massive troubles due to the coronavirus pandemic.
In March, the startup revealed that it would lay off a “significant number” of its 500 US employees and that it was closing its offices in Bangalore, India.
It also reported that its executive staff would take a “considerable” pay cut in order for the company to survive the crisis. It is unclear how the issues caused by Covid-19 affected the company’s final valuation before it was acquired by American Express.
“For several years, American Express has been expanding beyond our industry-leading commercial card products to offer our business customers a growing set of payment and working capital solutions,” said Anna Marrs , president of global commercial services at American Express .
“This acquisition accelerates our plans to offer US small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment. By bringing together Kabbage’s innovative technology and talented team with our broad distribution capabilities and over 60 years of experience backing small businesses, we can better help our customers successfully emerge from this challenging period and beyond.”
Kabbage CEO and co-founder, Rob Frohwein added, “At Kabbage, we have always made the success of America’s small businesses our primary objective. We have built a technology and data platform that provides them with the kind of capabilities and insights often reserved for larger businesses. By joining American Express , we can help more small businesses succeed with a fully digital suite of financial products to help them run and grow their companies.”
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