B2B FinTech Fairbanc Secures $13.3M (200B IDR) From Indonesian State Backed Pegadaian

SINGAPORE / ACCESSWIRE / March 7, 2024 / Fairbanc, the Singapore and Silicon Valley based technology platform that enables B2B Embedded Finance for micro-businesses in Indonesia in collaboration with large consumer brands like Unilever, Danone, Nestle, and Xiaomi just secured $13.3M in off balance sheet debt financing from the Indonesian State Backed Pegadaian’s digital lending arm that operates under the aegis of state owned largest Indonesian Bank, Bank Rakyat Indonesia. The startup was already financing over 200K merchants and was about to become profitable. The funding will further boost its profit as it scales up its operations with off-balance sheet financing through its new BNPL Gateway. This new financial backing comes on the heels of recent investments from the likes of Vertex Venture, Asian Development Bank, East Venture, Lippo Group, 500 Global, Accion Venture Labs, and Indonesian billionaire Michael Sampoerna.

Fairbanc-Pegadaian Signing Ceremony / Photo credit: Fairbanc

Fairbanc’s ability to extract outlet level Big Data by connecting with major brand’s ERPs and derive credit score using AI and Machine Learning were the key synergies highlighted by Pak Mulyono, the Chief of Transformation Office of Pegadaian who led the signing ceremony which was also attended by Teguh Ismanto, the Head of Digital Lending and Muhammad Ikhsan, SVP, Digital Lending.

The Digital Transformation Team: Pak Mulyono, the Chief of Transformation Office, Teguh Budi Ismanto, the Head of Digital Lending and Muhammad Ikhsan, SVP, Digital Lending. / Photo credit: Pegadaian

PT Pegadaian, a subsidiary of Bank Rakyat Indonesia, is mainly engaged in lending through a pawning system. Pegadaian , one of the most iconic companies of Indonesia, began its history in 1746 during Dutch colonial era, now serves over 21 million customers with over 4,000 branches throughout the country and has over $4.8B USD (73T IDR) of assets under its management.

Pegadaian’s long-term vision is to “act as the catalyst to help SMEs grow their income by offering working capital through a scalable digital platform like Fairbanc that can easily credit score FMCG retailers by analyzing their order and payment history by seamlessly connecting with the ERP systems of major consumer brands that sell to these retailers” says Muhammad Ikhsan, SVP of Digital Lending.

“Through Fairbanc platform, we empower SMEs to purchase more inventory on credit at the point of purchase to fuel sustainable growth. This synergy between finance and technology not only streamlines our lending operations but also positions Pegadaian as a key partner in the SMEs’ journey towards resilience and success in the digital era.” added Mr. Ikhsan who played a critical role in securing the partnership with the Silicon Valley based startup Fairbanc,.

Fairbanc, founded in 2019 by Mir Haque, a Wharton MBA who previously worked for many of the well-known global companies including Google, Adobe, McKinsey, and Deutsche Bank was recently shortlisted for the Cannes Lions Awards for Sustainable Development. According to a survey conducted by Unilever, 80% of the Fairbanc’s beneficiaries are unbanked and around 70% are women merchants who were able to increase their sales by an average of 35% – thanks to BNPL enabled by Fairbanc’s technology. Fairbanc’s founding team also includes many FinTech veterans like the former CTO of Kiva, a San Francisco based microcredit platform that operates in 77 countries and disbursed $1.4B in microloans, and Thomas Schumacher who co-founded California based emerging market microloan giant Tala that recently closed a funding round at $800M valuation.

With its new capital, Fairbanc plans to make a bigger push into Indonesia, a country that hosts the fourth largest unbanked population globally, with 95 million adults still lacking a formal account at a financial institution. However, with a growing middle class, an increasingly tech-savvy youth population, and a regulatory environment encouraging innovation and entrepreneurship, Indonesia is now home to the most billion-dollar tech start-ups in Southeast Asia (including Bukalapak, Go-Jek, Tokopedia, and OVO), boasting a range of e-commerce, ride-sharing, media distribution, and financial services.

Mir is convinced that Indonesia offers Fairbanc the right backdrop to bring about a scalable solution that can be replicated in many other emerging countries to address one of the greatest challenges and opportunities of the century: providing the millions of merchants with the basics of credit to help fuel economic revitalizations in order to uplift millions of poor merchants out of dire poverty. Mir is already exploring expansion opportunities into Vietnam and the Philippines in partnership with Unilever.

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