Hendri Wigunah

Hendri Wigunah

Startup Founder & Millenial Entrepreneur

Kabbage founders drum up $11M for Drum, an SMB marketplace for sourcing salespeople, goods and services – TechCrunch

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It’s often said that smaller businesses get the short end of the stick when it comes to technology solutions: they are more high-maintenance than consumers, but not as lucrative as larger enterprises, leaving them caught somewhere in an unsatisfying middle.

But today, two serial entrepreneurs who have already built one big startup catering to SMBs — loans platform Kabbage — are launching another effort to help fill that gap. Drum, billed as a marketplace for businesses both to source sales people and sell their goods and services, has raised $11 million in funding to launch its company and to — yes — drum up new business.

“We’re democratizing access to a physical salesforce by aggregating all the fractionalised or partial demand into a common platform and dispersing that to individuals in the gig economy,” said Rob Frohwein — the CEO of Kabbage who is co-founding Drum with his Kabbage co-founder and COO Kathryn Petralia and Troy Deus — said in an interview with TechCrunch.

The money comes from a group of investors, some of whom have previously backed Frohwein and Petralia. Deus himself is a longtime Kabbage employee whose most recent role there has been head of new venture sandbox Kabbage Labs. (Deus is CEO of the new venture, as Frohwein and Petralia are keeping their day jobs running Kabbage.) Backers include Propel Venture Partners (the investment arm of banking giant BBVA), Felicis Ventures, BlueRun Ventures, American Express Ventures, GroTech Ventures, Wildcat Venture Partners, BoxGroup and SV Angel.

“Drum unlocks a three-sided marketplace connecting any business to the customers they want through an on-demand network of salespeople,” said Harshul Sanghi, Managing Partner at American Express Ventures, in a statement. “This has the potential to dramatically accelerate new product introduction and customer acquisition for businesses. Amex Ventures is pleased to support Drum in its future growth.”

Part of the strength of that list likely comes from the fact that Kabbage has been a strong growth story (pun intended), with the company and demonstrating that it can build products that speak to the needs of SMBs.

Kabbage’s loans platform — which uses AI to quickly determine an applicant’s suitability to get a loan — is now valued at more than $1 billion and is growing at more than 55% at the moment, Frohwein said, and is starting to branch out into a new range of other financial services such as marketing and payments. (Some of Kabbage’s growth has come through partnerships, for example it works closely with the likes of Alibaba in the US to provide financing for businesses on their platform; through white-label services; and through its own direct channels.)

With Drum, Frohwein said that this was about identifying another problem area for businesses that aren’t being met by current services, that SMBs have found to be a challenge in fixing themselves, but that sit outside of the kinds of problems that Kabbage itself is aiming to solve. Specifically, here it’s about pulling together sales teams — called “Drummers” on the platform — to help market their products, either locally or further afield by using digital channels and the sales expertise they bring to the table.

With the rise in internet usage, a lot of businesses have shifted their sales and marketing efforts to digital platforms, essentially managing the work themselves by way of Google AdWords campaigns, through Facebook and so on. One big reason for that has been because hiring sales people — much less having them on the payroll — has just felt like a financial and organizational step too steep.

The idea behind Drum is to provide these businesses with a platform that lets both salespeople who have time or want to work on a project basis connect with businesses that might not want to take the step of full-time hires, but could use the expertise and human power of people to help them with sales. It borrows from the concept of the on-demand, gigging model made popular by many other enterprises, from home services through to transportation and food delivery that have been built around contract-based work in specific fields.

While you can see some of the benefits of viewing the engagement of sales people in the context of an on-demand, gig economy model, it seems that there might also be drawbacks.

I noted to Frohwein that matching a driver to a particular delivery may be less personality-specific than matching a salesperson to a particular sales job. However, it’s a challenge that he believes is not as big as it seems because Drum will be able to size up the capabilities and experience of specific people to make them better matches for the businesses looking to retain their services (using AI-based tools). It’s less like finding a perfect cultural fit, it seems, than finding the people with the right experience and administrative skills.

“Most of the sales that happen won’t be for complex items,” he predicted. “They are products and services like floor refinishing or repairing roof, who are looking for a better way to sell what they do.”

Another potential issue might be the fact that some salespeople might prove to use approaches that are not ultimately the ones you would want to have for your own brand or business. Again, this is a problem Frohwein believes can be addressed. The platform will have ratings on it, and the idea will be that those that are not good at their jobs simply won’t get business in the future. (In that regard, this is not unlike something like Airbnb, which mostly seems to work very well for people, with a few troubling hiccups among the many success stories.)

The next step past connecting businesses and salespeople is the third side of this three-sided marketplace. Drum aims to provide providing a platform for the products and services themselves to get sold, whether they are concert tickets, or roofing supplies. This will be developed over time, Frohwein said, and will serve to complement the work of the Drummers who might be working in physical, real-world sales as well as across digital channels.

The main message is that it will be harnessing a large group of businesses that want to connect to customers, and salespeople who will be looking for platforms to sell their clients’ goods, and the platform will become one component of how that works — again, addressing the fact that some of these businesses have not make the leap to e-commerce in part because they’ve found the options out there today, which might include Amazon or eBay, not quite what they want.

“This is a huge opportunity to acquire customers and a huge number of direct brands that could use a physical last mile,” said Frohwein. “Today, they use things like email lists and Facebook but they could use boots on the ground and talking about their businesses and promoting them.” He says he envisions most of the sales and help to come in the form of human, in-person selling.

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