BNLs for businesses are also starting to take off despite the fact that they target consumers. Fairbanc is based in Singapore but focuses on Indonesia. Small businesses can take out short term credit to purchase fast moving consumer goods. Fairbanc said it has raised $4.8 million in pre-Series A financing.
Lippo Group, Asian Development Bank, and Accion Venture Lab participated in the round. Fairbanc got previous investment from a number of people.
Fairbanc will use its new funding to expand in Indonesia, as well as explore new markets in the Philippines and Vietnam. Within the B2B supply chain is where it plans to expand into.
Fairbanc has partnerships with many consumer brands. Over 350,000 merchants have been onboarded by it in a year. The number of people buying inventory with the feature is 75,000.
Last-mile micro-merchants purchase $50 to $300 of each brand's products per week. Small retailers that sell phones are funded by FairBanc.
80% of Fairbanc's users are unbanked, meaning they don't have a bank account, and 70% are women. Merchants increased their sales according to the startup.
Fairbanc was founded by a Wharton graduate who piloted the startup in Bangladesh before deciding to focus on Indonesia. The birthplace of micro-finance, according to Haque, was Bangladesh. After living and working in the US for 25 years, he moved back to Bangladesh in order to create a digital credit platform for micro-merchants that did not require a phone or computer.
He said that he saw an opportunity for large-scale ecosystems to lend in the offline market with the help of their own app used by their offline sales agents. It didn't work out in Bangladesh because the market was too focused on micro finance.
Fairbanc decided to pilot with the multinational company in Indonesia. Almost 500 small merchants had no defaults over the course of a year. The model of stop supply until repayment results in very low defaults because merchants have to pay for the current week.
Indonesia was chosen as Fairbanc's first market because it is a much larger market in terms of population and GDP compared to Bangladesh, and it doesn't have the problem of too many Microfinance chasing the same merchants. Because of the same reason, banks in Bangladesh weren't all that excited.
Prior to founding Fairbanc, Haque worked at a number of companies. The company's founding team includes Kevin O'Brien, who was the chief technology officer of non-profit lending platform Kiva.
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