New entrepreneurial businesses are one of the key drivers of innovation and economic development. However, one of their greatest obstacles is accessing capital, especially since they are often initially unprofitable and lack tangible assets in the first few years of operation. Since debt financing from banks can be difficult for them to obtain, their capacity for growth can be limited. This case introduces students to Kabbage, a company that reduced the barriers associated with start-up and microbusiness lending by using a fully automated, data-driven platform. Kabbage made instant decisions on whether these businesses should qualify for a line of credit by reviewing its clients’ electronic data, analyzed quickly and accurately using specific algorithms.
Given the applied nature of the case, the data were gleaned from a wide range of secondary sources, specifically popular business press which was verified for authenticity.
Relevant courses and levels
This case can be used in a variety of undergraduate courses. Some course examples include small business management, introduction to entrepreneurship or entrepreneurial finance.
Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The authors may have disguised names; financial, and other recognizable information to protect confidentiality.
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