Part of Silicon Valley's secret sauce are stock options which help attract/retain employees while keeping salary costs in check. While that works great for VC-fueled growth stories, it doesn't work so well (or at all) for most normal small and medium businesses.
For most employees, cash is king and is the deciding factor on where they work. Year-end cash bonuses are a great way to incentivize employees and retain them (at least through year-end). But what about new employees facing their own personal startup expenses to relocate, pay off student loans, or just purchase the tools of their trade? Those folks need cash up front, and can't wait for promised year-end bonuses that may or may not materialize (especially in a recession).
Enter Keep Financial the latest brainchild of Kabbage founder Rob Frohwein and Kathryn Petralia, along with new co-founder Troy Deus. The Boston-based company launched at Finovate Spring a few weeks ago (see demo video below). With a $9M war chest from Andreesen Horowitz and others, the startup is looking to become the preeminent cash bonus as a service provider to mid-sized businesses around the globe.
While the startup hasn't publicly disclosed its business model, it's pretty obvious given its Kabbage DNA (and the A16Z funding), that it will eventually be fronting the money to its SMB clients to fund the cash bonuses (technically they are “forgivable loans”). Sure, there will be some messy situations when employees leave before they complete the vesting period, but that's why Keep will earn its 10%* annual premium on funds advanced (*my guess on Keep pricing; also depends on what SaaS fees are charged, if any).
Not surprisingly, the company won Best of Show at Finovate. Check out its 7-minute Finovate demo below. And for more context, listen to Finovate's Greg Palmer discuss the business with Rob.
– HQ: Boston
– Founded: 2022
– Raised $9M (Crunchbase)
– Website visits: 3,300 (May 2022; SEMRush)
– Unique visitors: 2,500
– Employees: 6 (Pitchbook)
– Investors: 5 (Pitchbook)
– Articles: 3 (Crunchbase)
– Linkedin: 384 followers (8 employees)