Kabbage founders Rob Frohwein and Kathryn Petralia launch fintech Keep

Rob Frohwein and Kathryn Petralia, founders of the online small-business lender Kabbage, have started a new company called Keep Financial. 

The San Jose, California, fintech offers a platform companies can use to offer employees upfront cash payments that vest over time. The idea is to provide an enticing perk to help recruit highly skilled employees who need money to buy a house, repay student loans or invest for retirement. And because these are essentially zero-interest loans the company pays back over time, these new employees are motivated to stay awhile. 

Rob Frohwein, co-founder and chief keeper of Keep Financial, says he got the idea for his new startup from a compensation plan for doctors he saw a hospital offer two decades ago. Co-founder Kathryn Petralia says no platform like Keep’s exists.

It’s the latest example of a fintech startup identifying a common pain point and offering a tech solution. In this case, the pain point is companies losing employees during the Great Resignation.

Frohwein got the idea for the company when he was thinking back to his early days as a lawyer. 

“I represented a young doctor who had graduated from Harvard Medical School and accepted a job in a rural town in southern Georgia,” Frohwein said. “I thought it was a very odd thing. He had offers from all over the country. Why did he accept a job in this rural town that he had no connection with?”

The reason: The town’s health system had offered him a loan of several hundred thousand dollars that would be forgiven if he worked at the local hospital for four years. 

“I was thinking about it in the current day, and I said, what if you could create a system that effectively accomplished the same thing?” Frohwein said. “It wouldn’t have to be several hundred thousand dollars, but it could be any amount of money. And it could be utilized to both recruit and retain critical talent.”

Keep’s Vesting Cash Plans allow employers to offer a portion of compensation as usable cash, delivered to employees upfront and vested or forgiven over time. In return, the employees commit to remaining active, supportive workers during that time period. The cash plans can range from a few thousand dollars for entry-level jobs with high turnover rates to six figures or more for senior roles. If employees leave before the loan term ends, they need to pay the rest back themselves, with Keep handling collections.

Frohwein brought on Petralia, his co-founder at Kabbage, the small-business online lender that was acquired by American Express in 2020, to help him build the company.

Frohwein and Petralia call this the first innovation in compensation since the introduction of stock options.

“There isn’t a platform that does this,” Petralia said. “When somebody gets paid a relocation bonus or tuition reimbursement or any other out-of-the-ordinary compensation, there’s some person in HR or in benefits who has to remember, ‘Oh, this person just resigned. They still owe us $1,300, I’ve got to get that back from them.’ ” 

In addition to the launch of the company today, Frohwein and Petralia said they have received a $9 million seed round led by Andreesen Horowitz with additional investment from Launchpad  Capital, Thomvest Ventures, Cambrian Ventures and Worklife Ventures.

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