SME lender Kabbage to acquire fellow lendtech Orchard
Orchard, which boasts the support of former Citigroup and Morgan Stanley bosses Vikram Pandit and John Mack, provides information on the marketplace lending industry to Wall Street companies. No terms have been made available and neither Kabbage nor Orchard have commented on the potential acquisition.
Orchard, which launched in 2013, recently attempted to change its business model to serve as a platform for trading loan securities. The failure of this initiative to gain traction, according to Bloomberg, led to the company’s desire to find a buyer of late. The firm had raised $40 million in funding from investors including Spark Capital and Thrive Capital.
Kabbage and Orchard have a history. The two announced a partnership back in the spring of 2015 that gave institutional investment managers on the Orchard platform the ability to access Kabbage’s consumer loan product, Karrot. The partnership also helped Kabbage add to its consumer lending business thanks to new access to Orchard’s constituency of sophisticated investors.
Kabbage made headlines last year when rumours surfaced that the company was raising money for the specific purpose of acquisitions. At the time, marketplace lender OnDeck was widely believed to be the primary target.
Earlier this month, Kabbage announced a partnership with Ingo Money to accelerate loan payments to SMEs. After finishing 2017 with a new COO and having reached a new milestone in extending more than $4 billion to more than 130,000 small businesses, Kabbage began 2018 by expanding its line of credit to $250,000 in a bid to serve larger business customers as well as its small business base.
“Giving small businesses the peace of mind and security to focus less on their finances and more on their passions is a key tenet at Kabbage,” the company’s new COO, Bob Sharpe, said when the news was announced. “Increasing our lines of credit to $250,000 significantly enhances our ability to solve financial hurdles for larger and more specialised businesses that may otherwise be unachievable, which we see in the market today.”
Founded in 2009, the Atlanta, Georgia-based fintech has raised $1.6 billion in funding. Among its products is Kabbage Card (part of the company’s broader Kabbage Everywhere initiative), which gives business cardholders the ability to take their Kabbage credit line with them wherever they go, immediately deducting transactions amounts from available funds and providing the user with a confirmation by SMS text.
UPDATE 27 April 2018: The acquisition has been confirmed by both parties.
As part of the deal, Orchard co-founders Matt Burton (CEO) and David Snitkof (chief analytics officer) will join Kabbage in leadership roles. 20+ Orchard employees in advanced analytics, data science and engineering will also join the Kabbage team.