SoftBank Group Corp invested $250 million in equity funding in a U.S. online lender for small businesses called Kabbage Inc. This marks the largest equity investment in lenders outside of China so far raising Kabbage’s total equity funding to almost $500 million.
Kabbage Inc. will use the cash to add lending products and other types of financial services as well as planning to launch in Asia within the next 18 months. Founded in 2009, Kabbage uses digital technologies to lower lending costs and offer credit faster than brick and mortar institutions. Additionally, the company sells its technology to large banks to provide credit online already providing almost $3.5 billion in funding to small businesses.
SoftBank looks for businesses that are competing with big industries and was mainly attracted to Kabbage’s technology and business strategy. The company wants to diversity Kabbage’s offerings into other financial services due to high customer engagement. Consumers usually engage with Kabbage 20 times over a three to four-year period.