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NativeAdVantage 10-Q2BA:

(10 Questions 2B Answered)

What do you do best?
What makes you the best?
Biggest success?
What are your aspirations?
Most challenging moment?
Favorite Motto?
Favorite People?
Favorite Places?
Favorite Products?
Current Passions?


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Featured NativeAdVice:

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Wayne Pacelle: CEO of The Humane Society of the US

Tom Guay: GM at The Sagamore Resort

Dr. Alejandro Junger: Founder of The Clean Program

Rob Flaherty: CEO of Ketchum

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Saturday
Mar252017

Jared Hecht: CEO & Co-founder, Fundera

My NativeAdVice:

Bio:

Jared Hecht is a co-founder and the CEO at Fundera, an online marketplace that matches small business owners to the best possible lender. He started Fundera after his cousin experienced the frustration and lack of transparency of applying for a small business loan. Previously, Jared co-founded GroupMe, a group messaging service that in August 2011 was acquired by Skype, which was subsequently acquired by Microsoft in October 2011. Prior to GroupMe, he led Business Development at Tumblr where he focused on international expansion and strategic partnerships. Jared currently serves on the Advisory Board of the Columbia University Entrepreneurship Organization and is an investor in startups such as TransferWise, Sweetgreen, and Flatiron. Jared received his BA in Political Science from Columbia University where he served as the publisher and managing director of Inside New York. He regularly writes columns with tips for small businesses for Forbes, Inc, Entrepreneur, and Huffington Post.

How did you get into the industry?

I’ve always been passionate about entrepreneurship and business.  What’s amazing is that given the contribution of small businesses to our economy, the odds are continually stacked against us. The number one problem small businesses face is access to capital — businesses need money to make money.

Banks are failing to meet entrepreneurs’ demands for credit. Every year, more than 40% of small businesses seek funding to grow, but less than 20% of them receive the capital they need from banks. Another 5 million business owners need funding but don’t ask because they assume they’ll be rejected. The numbers are astounding, especially considering the important impact small businesses have on our economy.

As a result of banks’ inability to meet this need for capital, an entire industry of alternative lenders has surfaced over the past decade to satisfy demand. It’s an industry that can be confusing and overwhelming to entrepreneurs, with credit products that can be unfamiliar and intimidating like equipment financing, merchant cash advances, accounts receivable factoring, term loans, franchise loans, and real-estate loans.

We launched Fundera to offer a solution to a problem plaguing millions of small business owners looking to grow their businesses. Fundera is an online marketplace that connects small business owners seeking credit with the best lender for their business.

Inspired by conversations with entrepreneurs, we believe that small business owners deserve access to the same tools that empower consumers to make sound financial decisions. That means that getting a small business loan should be as easy as booking a flight on Kayak or reserving a room on Airbnb.

During the next decade, non-bank alternative lenders will emerge as the primary capital providers to small businesses, which will drive nationwide economic growth, boost employment, and solve the number one problem entrepreneurs encounter: access to working capital. Our goal will be to empower entrepreneurs to grow their businesses by helping them find the financing they need while expanding the market for small business credit.

Any emerging industry trends?

In every industry, the internet has enabled consumers to comparison shop between vendors and select the best one for their needs. Private wealth managers, travel agents, stock and insurance brokers have all been automated by companies like Betterment, Priceline and E-trade.  Fundera is redefining what a loan broker does for the modern age by enabling comparison shopping in small business lending.

One prominent trend in our industry is that companies are leveraging data and algorithms to improve the speed and convenience of the lending process. Lenders are automating the underwriting process to make it easier for small business owners to get credit quickly. Fundera has become the first online broker to use an algorithm to recommend products and lenders based on borrower eligibility. Using our algorithm, we are able to optimize the application process for small business owners.

Any industry opportunities or challenges?

The online lending industry had a challenging year in 2016. After public scandals at a few of the leading online lenders, the media and investors alike were concerned about the future of online lending. Investors started to focus on other sectors of fintech, insurance and compliance technology companies in particular. The biggest challenge in the online lending industry is finding a sustainable business model and rate of growth. We’ve seen it first hand: after years of rapid growth, several online lenders have met their demise in the past year and stopped underwriting loans.

One of our biggest triumphs at Fundera has been keeping our valuation at a time when many companies were dropping amid scrutiny of the only lending industry. We recently raised another $5m in equity financing and have continued to grow through the tough times.

Inspiration for the business idea, and your vision for the Business?

The inspiration for Fundera came from a real experience of a business owner in my family. My cousin Zach is a fellow entrepreneur. He and his brother own and operate a chain of restaurants in Ohio called Fusian — similar Chipotle but for sushi rolls. It’s a remarkable establishment and one of my favorite places to eat. I fell in love at first bite when I visited their original location in downtown Cincinnati.

I wanted to be part of Zach’s journey, so I offered to invest in the company to help him open a third location in Columbus. Zach turned down my investment because he takes great pride in the fact that he and his family own 100% of the company, and he did not want to take on equity capital. Instead, he asked me for a loan to cover the expansion costs. He wanted $300,000 and to pay it back over three years with 10% interest.

I asked why he didn’t just go to a bank and was shocked when he told me that he had visited several banks, all of whom denied his request for a loan. The fact that a thriving business that employed more than fifty people was being denied the chance to grow seemed downright wrong to me, and the reasons he was denied — that he hadn’t been in business for more than five years and restaurants were “a risky industry” — were unreasonable.

Zach isn’t the only entrepreneur who has had this problem. When I helped him look into online lenders, I found a confusing industry – he was bombarded by offers from lenders he couldn’t make any sense of, and he didn’t know who to trust.

That’s what inspired me to create a solution for small business owners that would help them sort through the clutter of the online lending market, and find the best fit for their businesses. My vision for the business is to make it irresponsible not to come to Fundera first – to increase the products and lenders on our platform to include every possible financing option for small business owners, and to help them track their credit eligibility over time.

What's next for the Business in the near future?

In the near future, we expect that our proprietary lender selection algorithm will yield impressive results for our business. We are planning to grow top of funnel opportunities by bringing additional content hires to our team, and to strengthen our conversion rate by improving our application experience. We’re making a big push to increase our product offerings like business credit cards as well, to increase options for SMBs shopping on our site.

Your key initiatives for the  success of the Business?

When we first launched Fundera, it was a hands off experience for the borrower. We initially thought that if we could just show small business owners their options, they’d be able to compare them and figure out the best fit.  After we rolled out the product, we quickly realized that our original concept wouldn’t go far enough. Small business owners found themselves confused and overwhelmed by hidden fees, complex financial language, and products they couldn’t really compare. So, we decided to hire a team of dedicated loan specialists to guide small business owners through the loan application process and help them compare options. That move allowed us to become a true financial advisor for small businesses, rather than simply an aggregator website for comparison shopping.  It also helped us increase conversion and grow our business by guiding customers through the experience with human support.

Your most difficult moment at the Business? (and what did you learn?)

Over the course of the past two years, we’ve tried a lot of different strategic approaches as a company. The most difficult lesson we learned was the importance of focusing on one thing at a time. It’s tempting to try everything at once -- especially as a young company looking to experiment with different growth strategies. But we learned that targeting our efforts toward one main goal at a time was a more efficient allocation of resources and it helped us keep the team focused.

For example, when we focused our efforts primarily on increasing conversion, we saw some of our highest performing months. It would have been difficult to execute on our goal of increasing conversion without a singular focus keeping us grounded. I think it’s an important lesson to learn that entrepreneurs often get distracted by working on too many things at once. Sometimes it’s more effective to prioritize and get great at one thing before moving onto another.

Ideal experience for a customer/client?

The ideal experience for a customer on Fundera’s platform is quick, easy and informative.

The experience starts with the common application, which takes about 5 minutes to fill out. The customer is quickly contacted by one of our customer success reps, who walks them through the process and explains what documentation will be needed for each lender/product they are eligible for.

The customer then submits their documentation and receives offers back in a matter of days. That customer’s dedicated loan specialist helps them compare and determines the best fit to grow their business.

After the customer gets funded, they are contacted by a member of our Account Management team, who will serve as an ongoing resource for any refinancing needs and to help track credit eligibility over time.

How do you motivate others?

First, I listen. Meeting people where they’re at is incredibly important – especially at a small mission-driven company like Fundera. My job is to equip people with the tools and resources they need to perform to the best of their ability, and it’s important that they feel comfortable coming to me and explaining their needs.

Second, I’ve learned to speak other people’s languages. Everyone I work with is motivated by different goals, and as a CEO it’s my job to get to know what drives them and tap into it. Some people are driven by hard metrics and numbers, but that strategy doesn’t work for everyone. Others are motivated by qualitative feedback and the ability to grow and shape their own role.  The more you can understand about the way your employees communicate their needs, the better equipped you are to serve them.

Third and lastly, Fundera was built on transparency. It’s important to me that every member of our team always knows where we’re headed as a company, so that they can contribute to the best of their ability to help us get there. We host monthly town hall meetings and encourage a culture of feedback to help ensure that people stay in the loop about how we’re doing, and stay motivated to drive us forward.

Career advice to those in your industry?

My first piece of advice is relatively predictable, but can’t be overstated: make as many connections as possible. When we started Fundera, I was incredibly grateful for the valuable connections I made during my time at GroupMe -- and ultimately many of those supporters and connections became investors as well. The advice from those mentors and connections helped us grow Fundera to what it is today.

My other piece of advice is also pretty simple: surround yourself with people who are smarter than you are, and learn as much as you can from them.  

https://www.fundera.com

https://www.facebook.com/fundera/

https://twitter.com/fundera