You can be on Entrepreneur’s cover!

These Local Entrepreneurs Successfully Bootstrapped Their Start-Up When They Couldn't Secure Funding After 46 rejections, Idan Jaan and Jared Noché secured an angel investment into their business. How? Because they'd already bootstrapped their business – proving it could be both profitable and successful.

By Nadine von Moltke-Todd

You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media.


Vital Stats

Players: Idan Jaan and Jarred Noché

Company: Fundrr

Launched: 2017


In September 2017, Idan Jaan and Jarred Noché had an idea. Knowing the struggle that many small and medium businesses face accessing finance, they wanted to build a FinTech platform that assisted what they viewed to be an under-serviced niche.

"SMEs are the backbone of the South African economy," says Idan. "In our research, we discovered that banks don't have the structures in place to support small businesses. The formal banking sector requires a lot of paperwork that many SMEs just don't have.

Related: 10 Success Hacks for Millenial Startups

"They expect business plans, audited financials, insurance policies; the list goes on. Unfortunately, these small businesses don't have all these documents to present to them. Over and above that, due process means a loan can take up to 12 weeks to be approved. All around, it's a system that doesn't work for either party."

Idan and Jarred got to work on the problem. Idan's background is in launching and working with small businesses. Jarred's is in finance, having worked at Grant Thornton in South Africa and then the private equity space and hedge funds in New York.

Together, they understood the need – and how to service SMEs without the formalities that the banking sector requires.

In November 2017 they quit their jobs to give Fundrr 100% of their focus. By January 2018 they had been accepted into AlphaCode, an RMI incubation program for fintech start-ups in South Africa. By June 2018 they had dispersed their first loan.

Related: How Osidon Has Gone From Start-up To Scale-up in 2 Years

Entrepreneur chatted to Idan about launching a FinTech business, servicing the SME sector, attracting investors and getting strong mentors on board.

Q. SMEs not being able to access finance isn't a new problem. How has technology created the opportunity to cost-effectively solve this problem without the alternative funder carrying too much risk?

We came into the market to try and change a long-standing and ongoing problem. The way technology can create a cost-effective opportunity to solve this funding crisis is, in the simplest form, through less labour.

By automating the credit model and trying to have as little human interaction in the beginning phases of each transaction, we are able to operate our business as lean as possible and therefore not pass our costs on to the small business owners.

This is where technology is really changing how industries operate as well as cost structures.

The way we work does not affect our risk model. Our risk stays the same with technology or without it. We are balance-sheet lenders responsible for every deal we make. This means we will never carry too much risk. Repayments ensure we stay in the market and can continue to assist other SMEs.

Related: 4 StartUp Lessons From A Bootstrapped Industry Disruptor

Banks do not service small businesses because the margins don't work for them, given their large overheads and the amount of people involved in each deal. It has nothing to do with how risky SMEs are. This provides a great opportunity for businesses like Fundrr though.

Q. Do either you or Jarred have a tech background? How did this impact your vision for the business?

Both myself and Jarred are non-technical founders. We believe this gives us an advantage, as we can see the problem and the solution from the outside and from the end user's perspective.

We have partnered with technical partners to allow us to develop our vision and introduce the innovation we proposed into our company by using technology.

Q. Why do you believe you secured an investment into your business?

We are currently sitting with over 40 rejections from pitching to multiple people. This forced us to bootstrap our business. We believe in what we're doing and so we went all in – putting our life savings into Fundrr.

Related: 5 Startup Lessons That Will Secure Your Industry Status

This shows commitment. We've put every last cent that we have into this business, and it's already profitable. Investors like that. We both quit our jobs in November 2017 and worked full-time on the business without a salary until October 2018. At that point we started drawing R5 000 each as a monthly salary.

Every cent that we've made has gone back into growing the business. The commitment and the lean approach that we've taken allowed us to attract a very serious angel investor that has multiple investments in the FinTech space in South Africa and Africa.

They needed to see our commitment, that we had skin in the game and that we had traction. These were all things that we hadn't yet proven in our early stages when we first started looking for funding.

We believe that now that we've secured some funding, we are able to execute growth in the company. This will allow us to carry on operations and expand our offering to a wider segment of the market.

We plan on growing our book at a steady rate and carry on increasing revenues by an average of 25% month-on-month while continuing to be profitable.

Q. How many funders did you approach, what were they looking for?

We have pitched this business 46 times (pre-revenue and post-revenue), and every single time we've been rejected (excluding our angel investor who has since come on board).

Related: Relebohile Moeng Shares Her Lessons in Bootstrapping a Successful Beauty Startup

The problem was never the product. It was the fact that we were too new. We heard the same words over and over again: "We like what you're doing, you seem like two nice guys… But, it's just too early. Come back in a year."

I have no idea if it was just an excuse or not, but we heard that same line dozens of times. Someone even told us that we were crazy and that this would never work.

If we've learnt anything through the experience, it's to believe in yourself, back yourself and be persistent. Persistence in particular is the best tool when you're starting your own business.

Q. What advice would you give business owners looking to attract funders?

You always need to put yourself in the investor's shoes. Always think like them. Understand that they either worked really hard for their money or that they're using other people's money and have a strict mandate.

Related: Serial Entrepreneur Damian Michael Shares His Top 3 Startup Lessons

Understand the investor's ticket size and past investments. Does your start-up fit their mandate and does the amount you're asking for fit their investment range?

From Fundrr's experience, we see that people do not like to pay for your salary, so make sure the money you ask for is going to be used to generate revenue, which will in turn pay for OPEX (operating expenses).

You need to be prepared, model everything and show the investor in black and white what their money will do to the projected cashflow of the business.

We believe face to face meetings are much better than telephonic discussions. Be prepared, be prepared and be prepared. Learn from every pitch and be ready to pre-empt their questions by providing answers in your pitch.

Q. What advice would you give business owners looking to access funding?

We take a wholistic approach when we look at businesses. Our funding usually needs to have a growth-generative purpose. By that, I mean that the funding that is required will be used to grow the business (expansion, stock purchasing, renovation, and so on).

Related: How Bevan Ducasse Built a R100-Million Business After His Startup Nearly Failed

The SMEs applying to Fundrr should be operational for one year and have an annual turnover larger than R1 million per annum. This track record allows us to get enough data to do the underwriting on our side.

We currently use multiple data points that allow us to get a "real feel' for the business. Unfortunately, if one of the directors of the company has been liquidated or has a judgement against their name, then it will be really hard to get the go-ahead from our credit and risk committee.

I believe SMEs are not usually "financially ready' in terms of having all the documents in place when applying for funding. We receive multiple applications where small business owners only submit 50% of the documents required, which doesn't allow us the opportunity to start the underwriting.

SME owners should do some research and understand what documents lenders in the market seek and therefore be ready in advance. Their chances of securing finance will be much higher if they have everything in place.

Related: How Prately Was Bootstrapped Into a Local Giant - Without a Cent of Funding

Nadine von Moltke-Todd

Entrepreneur Staff

Editor-in-Chief: South Africa

Nadine von Moltke-Todd is the Editor-in-Chief of Entrepreneur Media South Africa. She has interviewed over 400 entrepreneurs, senior executives, investors and subject matter experts over the course of a decade. She was the managing editor of the award-winning Entrepreneur Magazine South Africa from June 2010 until January 2019, its final print issue. Nadine’s expertise lies in curating insightful and unique business content and distilling it into actionable insights that business readers can implement in their own organisations.
Starting a Business

6 Effective Funding Strategies for Startups

Navigating startup financing is complex. Entrepreneurs find themselves at the crossroads of innovation and survival, where a single decision can either fuel their dreams or extinguish their aspirations. Here we look at six ways you can finance your startup to support your business for long-term success.


You Won't Have a Strong Leadership Presence Until You Master These 5 Attributes

If you are a poor leader internally, you will be a poor leader externally.


26 Of The Richest People in South Africa

Here are 26 of South Africa's richest people, but how did they achieve this level of wealth? Find out here.

Side Hustle

He Took His Side Hustle Full-Time After Being Laid Off From Meta in 2023 — Now He Earns About $200,000 a Year: 'Sweet, Sweet Irony'

When Scott Goodfriend moved from Los Angeles to New York City, he became "obsessed" with the city's culinary offerings — and saw a business opportunity.

Starting a Business

A Free Business Plan Example to Launch Your South African Business

This free Business Plan example provides you with a sample business plan as well as guidance on how to write a business plan and important sections to include in your plan.

Starting a Business

10 Cheap Businesses You Can Start In South Africa Aimed At The Local Market

There are a few businesses that are more likely to thrive in South Africa than others. Here's a list of 10 that meet the needs of the country's people.