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Why We Started Fundera

Small businesses are the lifeblood of America. 28 million small business owners employ 49% of the U.S. workforce, create the majority of new job opportunities, and are responsible for 46% of the country’s GDP.

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.

This problem hit home for me two years ago. My cousin Zach is a fellow entrepreneur. He and his brother own and operate a chain of restaurants in Ohio called Fusian — think 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. 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, factoring, term loans, franchise loans, and real-estate loans.

Today I am proud to launch Fundera and be a part of the 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 like Zach from Fusian, 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. We will empower entrepreneurs to grow their businesses by helping them find the financing they need while expanding the market for small business credit.

My home for the next 8 days river rafting down the Grand Canyon.

My home for the next 8 days river rafting down the Grand Canyon.

My wonderful wife Carrie is producing an important documentary called Tough Love which sheds light on the most pressing issues of our country’s child welfare system. She and her Emmy nominated friend, Stephanie, recently started a Kickstarter campaign to help bring the film to completion. I encourage you to check it out, share the love, and support it here: TOUGH LOVE KICKSTARTER CAMPAIGN

My wonderful wife Carrie is producing an important documentary called Tough Love which sheds light on the most pressing issues of our country’s child welfare system. She and her Emmy nominated friend, Stephanie, recently started a Kickstarter campaign to help bring the film to completion. I encourage you to check it out, share the love, and support it here: TOUGH LOVE KICKSTARTER CAMPAIGN

toughlovefilm:

Did you know that there are over 380,000 children in the foster care system? Learn how we can lower this number by supporting TOUGH LOVE, a new documentary film about the child welfare system.  http://kck.st/174Amzg

This is important - I supported Tough Love the documentary about the child welfare system on Kickstarter. You should too: http://kck.st/174Amzg

toughlovefilm:

Did you know that there are over 380,000 children in the foster care system? Learn how we can lower this number by supporting TOUGH LOVE, a new documentary film about the child welfare system.  http://kck.st/174Amzg

This is important - I supported Tough Love the documentary about the child welfare system on Kickstarter. You should too: http://kck.st/174Amzg

The Programmable World

Today Wired’s new cover story about the Internet of Things was released. I highly recommend you read it as it covers the top layer of technological advancements in the physical world that will come to fruition over the next decade. The piece widely cites SmartThings, a company I am very fond of and have invested in, as a pioneer in the world of IoT (Internet of Things). IoT is imminent. Sensors are being commoditized and makers and hackers are using them to program and automate objects from household coffeemakers to industrial and enterprise manufacturing equipment. We are entering an era where the physical world, or physical graph as SmartThings CEO Alex Hawkinson refers to it, will quickly emerge before our very eyes.

What is most interesting is the way in which the IoT will prevail. There are two very distinct approaches and competing schools of thought. On one side, we have vertically integrated services - products that come pre-packaged with their own hardware and integrated software. Nest is the perfect example. It is a smart and beautiful thermostat designed by ex-Apple employees. It operates in a silo: you use the Nest thermostat (hardware and firmware) and control it using software via the Nest application. The experience is seamless, intuitive, and makes using a thermostat fun. This is identically analogous to the Apple approach - a beautifully designed piece of hardware with intuitive software maintained and used in a siloed and controlled environment.

On the other side we have the open source systems. These are products that are inherently open, meaning any hacker or maker can write programs for and on top of them. These programs are accessible and distributed to other programmers who use and build for the platform, and they can they contribute to those projects as well. The programs become better over time, and the best ones ultimately surface to end-consumers (e.g. If moisture in the lawn falls below a certain level then activate my sprinklers). These systems have strong network effects because the more people who  program and use them, the more customizable and useful they become for developers and consumers alike. However, they generally take longer to consumerize as they start by targeting the long-tale of initial makers and hackers who are passionate about building programs for themselves.

SmartThings rests in this category. Their approach, which is fundamentally opposite Nest’s, is to provide a SmartHub (think of a home wifi-router) which connects all the sensors (i.e. anything powered electrically like a coffeepot, stove, thermostat, etc.) in your house via different wireless protocols and gives you an interface on your phone to control and program them all. You can also access programs other developers have written for the system - think of these programs as applications similar to the ones you’d find in the Apple and Android app stores. The genius of SmartThings is that it is completely interoperable with a variety of different electronic equipment (see the growing list here). This enables them to focus on doing one thing exceptionally well: creating the platform to support the world’s Physical Graph. SmartThings also gives you your own sensors so you can connect anything to your SmartThings system (e.g. place them in your basement to detect flood levels or on your windows to detect if they’re open or shut). It can be as DIY and customizable as you want, or as simple as their out of the box solutions.

If Nest’s approach to vertically integrated home automation is analogous to Apple, then SmartThings approach to IoT and their “Physical Graph” is the Android of the programmable world. When it comes to the future, I ideologically support an open and connected one. We will ultimately move towards a physical world of many vertically-integrated and highly specified devices and services, or one based on openness and interconnectedness. In my mind, openness and interconnectivity will always prevail, and that is why it is very important to pay attention to SmartThings and the IoT.

Peek-a-boo

Peek-a-boo

The Letter Bill Clinton wrote Chris Webber in 1993:
Dear Chris,
I have been thinking of you a lot since I sat glued to the TV during the championship game.
I know that there may be nothing I or anyone else can say to ease the pain and disappointment of what happened.
Still, for whatever it’s worth, you, and your team, were terrific. And part of playing for high stakes under great pressure is the constant risk of mental error. I know. I have lost two political races and made countless mistakes over the last twenty years. What matters is the intensity, integrity, and courage you bring to the effort. That is certainly what you have done. You can always regret what occurred but don’t let it get you down or take away the satisfaction of what you have accomplished.
You have a great future. Hang in there.
Sincerely,
Bill Clinton

The Letter Bill Clinton wrote Chris Webber in 1993:

Dear Chris,

I have been thinking of you a lot since I sat glued to the TV during the championship game.

I know that there may be nothing I or anyone else can say to ease the pain and disappointment of what happened.

Still, for whatever it’s worth, you, and your team, were terrific. And part of playing for high stakes under great pressure is the constant risk of mental error. I know. I have lost two political races and made countless mistakes over the last twenty years. What matters is the intensity, integrity, and courage you bring to the effort. That is certainly what you have done. You can always regret what occurred but don’t let it get you down or take away the satisfaction of what you have accomplished.

You have a great future. Hang in there.

Sincerely,

Bill Clinton