A handful of startups are taking on traditional banking structures, and providing working capital to small businesses and individuals in need.

LendUp, Lenddo and others provide small-dollars loans to individuals that are traditionally denied by Main Street’s banks. Meanwhile, Kabbage, On Deck Capital and others are focussed on small businesses — they provide capital to online retailers so they won’t need to put personal assets on the line, like a house or car.

What these startups have in common is that they use publicly available data sources — social media data, sales and credit histories, demographic information and so on — to get a better picture of the borrower.

Kabbage monitors how merchants are interacting with their customers on Facebook, selling on UPS, or managing their finances in Quickbooks (Intuit’s accounting software for SMBs), as well as their transaction data from sites like eBay, Amazon and Etsy, to determine whether to give out a loan.

CEO Rob Frohwein explained in an interview that the engineering team is analyzing all the data to make “educated guesses” about a loan applicant’s future growth. Ideally, they are looking to fund merchants who are making about $1000 a month through their online store.

“When we tap into the data, we can see how you [an online merchant] were doing six months ago and project how you might fare a year from now,” he said by phone. Kabbage provides funding to about 80 percent of the small businesses that approach them — the big question, Frohwein admits, is how large the loan should be.

Due to its data-driven approach, the Atlanta-based company beat out hundreds of applicants to be named the winner of VentureBeat’s CloudBeat Innovation Showdown competition in late Nov.

on Soberg, a financial technology-focused investor at Blumberg Capital has been keeping a close eye on the company since it launched in 2009. Kabbage is providing “a really valuable service, and the market is underserved,” he explained. In my opinion, this is one of the iconic financial technology startup companies.”

Kabbage has continued to grow — and this week, announced an expansion to the UK, its first market outside of the United States.

Marc Gorlin, chairman and cofounder, said banks are “just as challenged” at providing cash to small businesses in the UK, “as they are here.” He added, “It doesn’t hurt that it’s also the biggest e-commerce market in Europe [and] is also Ebay’s fastest growing marketplace.”

Kabbage charges an interest rate of between 2 percent and 18 percent, depending on how long the advance is unsatisfied.  Merchants can use the working capital for as short as one month to six months. Kabbage lent about $7 million to small businesses in 2011, and “about ten times that” in 2012, according to Frohwein.

The company is pulling in north of $10 million in revenues on an annualized basis.

Just like any startup, Kabbage’s executive team need to fundraise to ensure they have a pool of money to lend. They have succeeded in raising about $60 million in equity and $15 million in debt to date, and expect to close another round in the coming months.

“We are still a small business feeling the pain of needing capital to grow,” Frohwein admits. “But we’re seeing a huge growth ramp,” he said.

Kabbage has received venture capital backing from Thomvest Ventures, Mohr Davidow Ventures, BlueRun Ventures, the UPS Strategic Enterprise Fund, and SV Angel, among others.

Small business loan image via mangostock // Shutterstock 

If you run a small business, On Deck wants to lend you some cash. But it’s got to make some for itself first.

The online local lending company has raised $42 million in a series D funding round led by Institutional Venture Partners, which joins existing investors RRE Ventures, SAP Ventures, and First Round Capital.

On Deck offers short-term loans ranging from $5,000 to $150,000 to small businesses that need them. The system is especially attractive because it’s fast: On Deck says that the application process takes only minutes, and it’s often able to give applicants decisions within a day.

More significantly, On Deck looks beyond credit scores to determine eligibility, which can make a real difference to those with not-so-pretty credit scores.

The system seems to work pretty well. On Deck says it’s given $400 million to thousands small and medium-sized businesses since 2008. And it’s these businesses, On Deck says, that really fuel the economy’s growth.

With the cash, the company says it will be able to continue product development and increase its marketing efforts, which will help it reach more potential customers. 

On Deck CEO Noah Breslow says that his company intends to lend more this year than it has during its whole lifespan. And for cash-strapped businesses, that’s a good thing to hear.

Photo: Shutterstock

Radius has raised $12.4 million to measure these ripples and turn them into actionable sales insights.

Radius crawls the Internet for information about small businesses. The engine collects data in real time from over 22 million businesses and indexes it into a goldmine for sales teams. The information is highly searchable and, when combined with lead generation tools and CRM integrations, makes it much easier for companies to identify potential customers and partners.

The brain behind the company is Darian Shirazi, Facebook’s first intern, who forsook college to pursue life as an entrepreneur. Forbes recently named Shirazi one of its 30 Under 30 tech pioneers. Shirazi swung by the VentureBeat offices to chat about his startup, the funding, and the future of small businesses in America.

“There are big challenges today for business trying to sell to or work with small businesses because there is no good deep information about small mom and pop businesses,” he said. “We are trying to add as much data as we possibly can from all over the web to track the small business economy, which represents 70% of the American economy and is responsible for eight times as many jobs.”

Amassing data of this kind is difficult — many of these companies have a weak (or no) online presence, and their churn rate is extremely high. Shirazi said that 10% of small businesses either move, die, or come into being every month, making it a monumental task to keep up with the rapidly changing index. Furthermore, Radius faces challenges like variations in labels (such as “and” vs. “&”) and distinguishing between multiple stores with the same name. Shirazi and his team, however, are passionate and up for the task.

“My family has started businesses for hundreds of years,” he said. “I care about the small-business economy and I care about data. There isn’t really a way to do this halfway. We have spent the past three years working on this database. This funding will help us build a sales team for ourselves, add engineers, add new data sources, and build up a data science team to build the best data product out there for small businesses.”

Using Radius, sales and marketing teams targeting small businesses can apply specific filters like ratings, increasing/decreasing traffic, minority-owned etc., to pull up lists of businesses that fit their criteria. Based on the results, they can build informed and actionable lead lists. Target customers include daily deals and e-commerce sites, business insurance agencies, web hosting companies, and payment platforms.

The financial sector represents a major market for Radius’ technology, which is why American Express significantly contributed to this round. While Shirazi did not comment on whether this was a strategic partnership, he did say there was “alignment” and “overlap” between his product and American Express’ goals.

Radius’ data is valuable for a huge range of applications. As small business owners become more tech-savvy, this is just the first toe dip into the pool.

Existing investor Blue Run Ventures also participated, after throwing in for Radius’ first $6 million round along with Comcast. Radius is based in San Francisco and has 20 employees.

Infusionsoft has raised $54 million from Goldman Sachs to help small businesses succeed. It does this by building custom, all-in-one systems that combine CRM, email, and social marketing, and sales tools. From this platform, small business owners can more effectively attract new customers, wage automated marketing campaigns, engage existing customers, and drive sales.

Infusionsoft started out as a custom software shop in 2001. The founders quickly realized that companies sought this type of comprehensive product. Its target customers are businesses with two to 25 employees that are “owner-operated, lack IT support, follow their buyers online and desperately need effective sales and marketing tools to succeed.” While Marketo, Hubspot, and Salesforce offer comparable solutions, they do not cater specifically to this segment.

“The small business market is underserved by software companies,” said CEO Clate Mask in an email interview. “Most vendors in the sales and marketing SaaS industry are gunning for the enterprise clients and their products show it. Mid-market software and IT support is too expensive and complicated, but simple marketing and sales tools can’t effectively manage their growing businesses. True small businesses are left having to figure out how to make these systems work for their needs and it usually fails.”

Customers include wedding videographers, kickboxing gyms, and animal clinics as well as internet startups. Infusionsoft has over 12,000 customers around the world and grew by more than 50 percent last year. This third round investment will contribute to developing the product and accelerating its own marketing and sales efforts.

“The news of this deal might shock some people due to the size of the round and the fact that it’s coming from a company outside of Silicon Valley,” said Mask. “But anyone who’s been following Infusionsoft knows that this makes perfect sense. We’ve had a vision for a long time and we stuck to it like glue. Every decision made — from hiring to product development — reflects that vision and now we’re ready to go big.  The sales and marketing SaaS market is blowing up, the small businesses market is blowing up, and we have the most perfect launch pad.”

This brings Infusionsoft’s total raised capital to $71 million. Previous investors include Mohr Davidow Ventures and vSpring Capital. The headquarters are in Chandler, Ari. (or Silicon Desert). It currently has 350 employees.

Have you ever built a product that small businesses would love, but you’re not sure which clients are your best targets?

Bizness Apps, a company that helps small businesses build mobile apps, has launched its new customer relationship management (CRM) tool at DEMO, the semi-annual conference for disruptive technology.

With its expertise in the space, San Francisco-based Bizness Apps claims that it is ideal for new sellers who are targeting SMBs. It’s less expensive than more established CRM tools like Salesforce, Zoho, and SugarCRM on the market that are built for corporate salespeople.

“We organize local leads by industry clearly and concisely and then narrow them down based on numerous optional criteria,” Andrew Gazdecki (pictured, left), chief executive of Bizness Apps explained.

The tool lets you hone in on those small businesses that are most active in self-marketing, or those who could really benefit from your product or service. Other features include a sales tracking pipeline, an appointment scheduling calendar, a metrics dashboard, and a native iPhone app to track sales on the go.

On stage at the DEMO conference in Santa Clara, Gazdecki introduced the product to a roomful of investors and fellow entrepreneurs. He pointed out the vast size of the market and the untapped opportunity: “There are over 500 million small businesses in the world today and tens of millions of people selling to these small businesses,” he said. “With business apps and business CRM, we feel that we have a multibillion opportunity on our hands.”

The panel of sages at DEMO were impressed with the technology, but had some advice for the founders. “It would be even better if it was ingesting some Big Data for predictions and better lead-scoring,” said Pete Sonsini of New Enterprise Associates. Ross Fubini of Kapor Capital followed-up with a particularly salient point. To succeed, Bizness CRM will need to educate small businesses about the benefits of CRM. “[Many of them] don’t understand CRM,” said Fubini.

Gazdecki told me that since implementing Bizness CRM internally for Bizness Apps resellers, the company has seen about 25,000 small business deals created, and about 5,000 of these deals turned into won sales in the first two months.

Since launching at the Spring DEMO conference in 2011, the company has raised $100,000 from angel investors.

Check out the video for more information.

Bizness Apps is one of 75 companies and 6 student “alpha” startups chosen by VentureBeat to launch at the DEMO Fall 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.

Top image courtesy of Morgan Lane Photography, Shutterstock

Bigcommerce has taken a big $20 million to accommodate its rapid growth and accelerate product development. The platform helps small business owners create professional online stores so they can “Sell More.”

With the boom in e-commerce, it’s important for retailers to have a strong web presence. However, many small business owners don’t have the resources to set up fully functional outposts online.

Bigcommerce offers a suite of tools to help retailers launch attractive, user-friendly online stores.

The package includes solutions for design, search engine optimization, data analytics, marketing, reporting, apps and integrations, security, product configuration, inventory management, payment processing, and more. Owners can completely customize their stores and incorporate features like product reviews, coupons, and mobile compatibility.

Today, the company also announced a redesign that will make the software more consumer friendly.

“Small and medium businesses shouldn’t need a degree in design and web development to run a successful online store,” said cofounder Eddie Machaalani. “They want it to be easy and intuitive.”

Bigcommerce has some 30,000 customers to date and has facilitated almost $1 billon in transactions since launching in 2009. It has seen over 1,000 percent growth in revenue and is quickly expanding its sales and marketing teams, which are based in Austin, Texas. The executive, engineering, and product teams run out of Australia, where the founders are from.

This second round of funding was led by previous investor General Catalyst, which gave $15 million last summer. Mike Maples of Floodgate also joined this round, bringing the company’s total to $35 million.

You may not be able to buy love with money, but you can at least find out how much that love is worth. At least in terms of e-commerce: SumAll launched a metrics tool today that visually represents the power social media has on e-commerce.

SumAll Social Metrics consolidates transactional, social, and web traffic into one dashboard. The technology generates graphs and personalized reports as well data that is searchable by geography, demographics, and types of actions. Marketers can immediately see the connections between Facebook fans, Twitter followers, online activity, and sales data.

Businesses that dedicate significant amounts of time and effort to social media marketing have a vested internet in gauging how effective these efforts are. With SumAll, companies can seek out patterns, track trends, make side-by-side comparisons, and gain customer insights. This data can then be used to make business decisions and strengthen the user base.

The startup’s overarching mission is to make business-intelligence solutions accessible to small and medium-sized businesses — companies that lack the resources to capitalize on data analytics can use SumAll to see value of a “like” in dollars and cents.

SumAll is funded with $1.5 million from Battery Ventures, General Catalyst, Matrix Partners, and Wellington Partners. It is based in New York.

BizSlate unveiled a supply-chain management tool for small medium-sized businesses today.

Until recently, enterprise resource planning (ERP) software has been an expensive, complicated proposition, offered by the likes of SAP, Oracle, and Sage to large companies that can afford multi-hundred-thousand-dollar packages and consulting contracts that can run into millions of dollars.

But small businesses have supply chains, too, and getting a handle on what’s where is an increasingly important competitive point in the global marketplace.

BizSlate’s ERP solution offers small businesses, typically with 100 employees or fewer, the ability to monitor and diagnose supply chain and operational issues as efficiently as larger companies, but with a lower cost. It’s a software-as-a-service (SaaS) solution, delivered over the internet. Among the features BizSlate offers are support for the following:

• Placing orders to factories for products
• Receiving products into inventory
• Receiving customer purchase orders
• Generating sales orders and fulfillment documents
• Printing pick tickets, packing slips, and shipping labels
• Shipping products to customers
• Creating customer invoices
• Automatically syncing with QuickBooks for general ledger and financial reporting purposes

BizSlate unveiled its ERP solution today at the DEMO Spring 2012 conference in Santa Clara, Calif.

CEO Mark Kalman

“It is exciting to fulfill our mission of helping [small and medium businesses] overcome the challenges they face managing their supply chain,” said cofounder and chief executive Mark Kalman (pictured) in an email to VentureBeat. “SMBs need to remain agile, they need rapid access to key information from anywhere in the world, and they need to maximize efficiency in their warehouse and back-office.”

Although it’s delivered over the internet, BizSlate’s technology is based on Java and Oracle on the back end. The company has raised a total of $370,000 to date from Kalman and from BizSlate’s 19-company customer steering committee, each of which contributed an average of $18,000.

These customers have been instrumental in helping BizSlate develop its ERP offering, Kalman said, providing input, guidance, and feedback from the company’s earliest stages.

Previously, Kalman was co-founder and chief executive of eZCom Software Inc., a SaaS Electronic Data Interchange (EDI) provider focused on helping SMBs streamline supply chain operations around EDI relationships. While at eZCom, he realized that almost half of his customers were using QuickBooks and were having difficulty integrating their own supply chains with Intuit’s tool. He left eZCom to start BizSlate in October, 2011.

The company is based in New York, New York.

BizSlate is one of 80 companies chosen by VentureBeat to launch at the DEMO Spring 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.

Photo and screenshot courtesy BizSlate.

It’s tax season, and you can almost smell the sweat dripping from nervous small business owners’ noses. Accounting software maker Outright wants to be the sweatband by connecting a data hose to your website’s point of sale product.

“We’re going after the small and simple businesses where the business owner is doing all of the tasks inside that business,” said Outright chief executive Steven Aldrich in an interview with VentureBeat. “They are unhappy and frankly worried that they’re not organized for tax season.”

The company is integrating online shopping carts to its accepted data sources, and is starting with the Cashie Commerce cart. Outright takes data feeds from products that many small business owners use to make transactions such as PayPal, Etsy, eBay, banks, and credit. It then organizes the data in your Outright online account so owners can see what profit they’ve had, what they’ve already taxed, their operating costs, and more.

All you have to do to set up the data feed is go to a webpage within your Outright account and “click a button” to allow Outright to access that data. Outright will make the back-end connection on its own. You do have to sign up with Cashie separately if you’re not already using it. If the need arises, Aldrich says Outright would create a page where customers can create a Cashie account as well as sign up their data feed. That does not yet exist, however.

Outright decided to spur its shopping cart data program with Cashie due to customer feedback. The shopping cart company allows people to sell their wares on individual blogs or websites, and makes money through transaction fees. Outright isn’t going to stay exclusive with Cashie, however, and hopes to branch out into competing products.

Aldrich claims that 70 percent of these small businesses are still working with pencil and paper to keep up with their bookkeeping. But pen and paper isn’t their only competitor. Companies like Intuit’s Quickbooks, Xero, recently funded by Peter Thiel, and inDinero provide similar services.

According to Aldrich, these companies cater to the SMB, or the small to medium-sized business. Instead, he puts emphasis on the “small and simple” customer, the artist selling their paintings online, or the fashion-forward couple reselling vintage clothes through Etsy.

As for inDinero, Aldrich said, “They’re small, from what we can tell, in the marketplace. We haven’t seen them in the discussions that small businesses have with us.”

It’s free to sign up with Outright, the company only makes its money through sign ups to its premium service, Outright Plus, which costs $9.95 per month. There is otherwise no cost associated with integrating Cashie. To take advantage of the tax season, Outright is offering free admission to Outright Plus through the end of April, after which regular monthly payments will be due.

Outright was founded in 2008 and is headquartered in Mountain View, Calif. The company thus far has 150,000 customers and has taken on $10.5 million in funding. Investors include Sequoia Capital, Shasta Ventures, and First Round Capital.

Image via Shutterstock