Jared Hecht, a 20-something entrepreneur, sold his first startup, GroupMe, to Skype for about $US80 million in 2011.
After working at Skype for several years, he’s now working on Fundera, a company that wants to make it dead simple for small businesses to find and secure a non-bank loan.
The company launched in February with five employees and $US3.4 million in funding, but Hecht says it feels like they have been chugging away for five years, instead of five months.
The company was also co-founded by Andres Moran and Rohan Deshpande.
In May, the team made a big change and released a completely revamped experience for customers. Until May, small business owners would fill out a basic common-loan application on Fundera, get several lending matches to choose from, and then wait for one of the funding providers to call them. The majority of the experience was taking place off of Fundera’s platform.
“We were effectively outsourcing a lot of our sales and support by doing it that way,” Hecht told Business Insider. “We realised that wanted to own the entire experience end-to-end.”
Now, prospective loan recipients will complete an upfront application, see their matches, select one or more of them, and then submit all of the exact information that the lender needs to make an offer directly through Fundera. Once Fundera has all of the proper documentation, it submits the application on the business owner’s behalf. Users never have to leave the platform, and will get the tons of help from Fundera’s team along the way, if they need it. Hecht says that members of Fundera’s “customer success team” aim to be educators, giving the small business owners as much information as possible to make good, responsible decisions about which loan product to go with.
When Fundera first launched, customers who showed intent were only completing the entire process and getting loans 2% of the time, but that percentage has since surged to over 10% thanks to Fundera’s platform updates. That’s more than a 5X success increase. Since February, Fundera has helped small business owners get 45 loans, with the average loan around $US45,000. 85% of small business owners who have gone through the complete application process have received offers from lenders and are fully funded.
The service is entirely free for the small business owner, and lenders will pay between 1 to 3% of the total loan to Fundera as an origination fee. Fundera launched with 20 non-bank lenders, but it now has 24 on-board.
“It’s really about helping the internet do to small business lending what it’s done to virtually every other industry out there,” he says. “We want to increase price transparency, empower the consumer, educate them on all their options, and make it very easy for them to do it themselves.”