Jared Hecht of Fundera
Today we are delighted to interview Jared Hecht, co-founder of Fundera; an online marketplace for small business loans that connects small business owners with a network of 30 different lenders – using one common application.
Our questions are in bold.
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Who are you and what’s your background?
Hi! I am Jared Hecht – co-founder of Fundera, an online marketplace that matches small business owners to the best possible lender. I was motivated to start Fundera after my cousin experienced the frustration and lack of transparency of applying for a small business loan. He was denied by banks, and when he brought his search online, we realized there was no real way to compare offers easily, or tell who to trust. I wanted to create a solution that would help small business owners get the best loan to grow their businesses, so we launched Fundera.
Before Fundera, I co-founded GroupMe, a group messaging service that in August 2011 was acquired by Skype, and then was acquired by Microsoft in October 2011. My time at GroupMe was interesting because it taught me a lot about creating a seamless user experience for people to engage with – and I brought those lessons with me to Fundera.
Before founding Groupme, I led Business Development at Tumblr, where I focused on international expansion and strategic partnerships. I currently serve on the Advisory Board of the Columbia University Entrepreneurship Organization, and I’m an investor in startups such as TransferWise, Sweetgreen, and Flatiron. I received my BA in Political Science from Columbia University, where I served as the publisher and managing director of Inside New York. I was honoured to be featured in Forbes’ 30 Under 30 in 2015, and I regularly write columns with small business tips for Forbes, Inc, Entrepreneur, and Huffington Post.
What is your job title and what are your general responsibilities?
I am the co-founder and CEO of Fundera. I have several responsibilities: I manage our senior leadership team, providing strategic guidance on everything from managing people, to prioritization and goal setting for each department within our organization; I craft and guide the vision and strategy for the company and business while regularly communicating it internally and externally; I recruit the best possible people and talent to help our organization grow; and I spend time developing and investing in relationships with strategic partners, whether they be investors, lenders and financing providers, or referral partners.
Can you give us an overview of your business?
Fundera is an online marketplace for small business loans that connects borrowers with 30 different lenders using one common application. We are a new kind loan broker that is using software and algorithms to determine the best loan for every business.
Our online common application gets smarter as small business owners answer each question, cutting down on unnecessary questions and reducing the search time from weeks or months to minutes.
Once a small business owner has filled out our common application, our algorithm determines which lenders and products would be the best fit by running the application against our data on thousands of small businesses’ eligibility, offers and acceptance rates. Our customer success team works closely with the borrower to compare offers and select the best one.
Fundera aims to be a one-stop shop for every business owner’s financing needs – particularly in such a confusing and overwhelming industry. Fundera.com features a wealth of free content with tools, resources and guides for small business owners. Our blog is the most-trafficked blog dedicated to small business finance in the country, and we have content partnerships with over 40 sites including Inc, Entrepreneur, Huffington Post and others.
We don’t underwrite loans ourselves – rather, we get paid a percentage of each loan funded (3-5%) by the lender.
Tell us how you are funded
We are VC Funded. We’ve had 3 rounds of fundraising, raising a total of $20M from companies like BoxGroup, First Round, Khosla, QED Investors and Core Capital.
Why did you start the company? To solve what problems?
It all started with my cousin Zach, an entrepreneur in Ohio. He owns a chain of fast casual sushi restaurants, and their growth has been phenomenal. A few years ago, he was looking to expand, and he needed some capital to open up another location. At first, I wanted to invest in the company – but Zach wanted to maintain 100% ownership of the business, so he wanted to search for a loan.
When I asked Zach why he didn’t just go to the bank, I was shocked to learn that he had been turned away by several. And the reasons didn’t seem legitimate to me – not enough years in business (despite clear growth) and that restaurants are a “risky industry.” I figured there had to be options out there for entrepreneurs like Zach who needed capital to grow their businesses.
So, we started to search online. But searching for a loan online proved to be confusing, intimidating and daunting. With hundreds of lenders offering loans and no way to distinguish them, it was hard to know who to trust. Each application took time and effort, and it felt like there was no source of information to help us compare loan products or lenders and select the best one.
Zach’s experience showed me first-hand the fundamental problem with the online lending market, especially for small business owners. First of all, there is a wide variety of products available to small business owners, but they aren’t always well equipped to understand the pros and cons of each type of loan for their business.
Each business is different, and that’s especially confusing since loan prices and terms are depicted inconsistently across lenders and products – leaving no easy way to compare offers. The process of applying for multiple loans at once takes a ton of valuable time for small business owners.
We created Fundera as a solution to many of these problems. With one common app that gets smarter as business owners answer questions, we can save time and still connect them to 30 lenders. We have on-site information, disclosures and tools to help business owners make comparisons. When a business owner comes to Fundera, they can select the right product and lender for their business out of all of their options – and our team helps them through the entire process.
Who are your target customers? What’s your revenue model?
Our customers are small business owners. These small business owners may be at any stage of growth. Our content includes tips for all kinds of businesses across industries, about everything from improving their credit scores to managing employees.
Many of our customers come to us with debt already on the books, and we work with them to save money on their payments. Other customers come to us simply to explore their options and learn about small business finance.
We’ve featured some great stories of our customers on our blog!
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
I’d wave my magic wand at the IRS and make it easy for consumers, business owners and companies like Fundera to easily and digitally integrate with them to access tax returns. So much of the decisioning in small business lending comes down to data in a tax return, if there were an easy way to access this verified data set, the process of applying for a loan as a business owner, and extending credit as a lender, would be infinitely easier.
What is your message for the larger players in the Finance industry?
My message to the larger players in the finance industry is that they should be open to innovation and partnerships. When online lending first emerged, the word on the street was that these online companies were coming to eat the banks’ lunch. But the truth is that everyone is better off when fintech companies work together with banks to improve the experience of applying for loans, and make capital more easily accessible for all business owners.
What phone are you carrying and why?
I have a Nexus 7P, but should really switch over to a Pixel already. I’m a die-hard Android user. My personal and work-life runs in Google Apps, so I love that all the default applications in Android are the default Google Suite applications I use to run my life, from Google Maps, to the Calendar, to GMail, and Chrome.
Where do you get your industry news from?
I read the Wall Street Journal, NY Times, Financial Times
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
@fundera because it’s the best source of information for all things small business, obviously!
@fintechjunkie is arguably one of the smartest investors in fintech
@adamludwin is the master of blockchain
Can you suggest the name of an Angel Investor or VC that might be interested in being profiled?
Adam Rothenberg from Box Group, or Charles Birnbaum from Bessemer Venture Partners.
What’s the best FinTech product or service you’ve seen recently?
Rhino – it’s a new service that gets rid of pesky security deposits when you go and rent an apartment.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
In the next 5-10 years we are going to see a push from Amazon, Google, Apple, and maybe Facebook to become the new financial institutions of choice for consumers. They have hundreds of millions of customers (and in some instances billions) who use their products daily, trust them with their most personal information, and love the convenience they provide. Managing your money is a logical next step for some of these major players.
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Our thanks to Jared for answering our questions today. To find out more about Fundera, visit their web site: https://www.fundera.com/ or reach out via Linkedin or Twitter on @fundera or @jaredhecht
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