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Try and try again. That’s what the founders of Joburg based fintech startup Fundrr, which lends to small businesses, have had to do to secure funding for their own business.
The startup finally landed funding in May from a Cape Town investor, after previously being rejected by 50 other angel investors.
The startup was founded by Jaan, a financier, and chartered accountant Jarred Noche in June last year.
“Everyone said it was too early,” the startup’s co-founder Idan Jaan (pictured above, left with co-founder Jarred Noche) told Ventureburn in a call today. “Investors said we needed a track record,” he added.
He said most of the 50 rejections had come about when the startup was in the pre-revenue stage — this despite both founders having each invested R750 000 of their own “life savings” and having opted not to take a draw a salary from the business in its first 12 months.
The co-founders of Fundrr have each invested R750k of their own savings in the startup
Last month the startup reported that it had been able to attract “substantial funding” from an angel investor and had opened offices in Johannesburg and Cape Town (see this story).
Jaan today declined to name the investor or how much had been invested. However, he was able to say that the investor is based in Cape Town and has made other fintech investments and that he has taken a 15% stake in the startup in return for putting in some debt.
Over R7m lent out
Since inception Fundrr has lent out over R7-million to 60 small businesses, according to figures from Jaan.
He said the average client has an annual turnover of R4-million and has taken out a term loan of R130 000 over six months.
Last month the startup said these businesses it funded are in food, retail, tourism, manufacturing, supermarkets, automotive, medical, health, beauty, accounting, entertainment, childcare and construction.
Automated credit model
To qualify for funding small businesses must have at least a 12-month track record, with a minimum of R1-million turnover or asset value.
The startup has developed an automated credit model that analyses close to 100 data points (including factors like social media presence) to provide a more complete picture of a small business and its growth possibilities.
This produces a Fundrr score, and on this basis, they are able to provide loans from R20 000 to R500 000. Fundrr has offered loans to 70% of those who have applied.
Jaan said during the bootstrapping phase of their business the two got significant support from fintech accelerator AlphaCode, which provided the startup with office space, mentoring and even discounted legal fees.
*Correction: In the initial version of this story we referred to Idan Jaan as a chartered accountant, when it is in fact his fellow co-founder Jarred Noche. We regret the error.
Featured image (from left to right): Fundrr founders Idan Jaan and Jarred Noche (Supplied)