Start-up “Buy Now, Pay Later” (BNPL) gained traction by targeting consumers, but BNPL for businesses is also starting to grow. An example is Fairbanc, which is based in Singapore but focuses on Indonesia. It allows small businesses to borrow short-term credit to purchase inventory of fast-moving consumer goods (FMCG). Fairbanc announced today that it has raised $4.8 million in pre-Series A funding led by Vertex Ventures.
Other participants in the round include Indonesia’s Lippo consortium, the Asian Development Bank and Accion Venture Labs. Fairbanc has also received prior investment from East Ventures, 500 Global and Michael Smapoerna.
Fairbanc will use its new capital to expand in Indonesia and explore new markets such as Vietnam and the Philippines in partnership with Unilever. It also plans to expand into verticals beyond FMCG, including in the B2B supply chain.
Fairbanc has partnerships with 13 consumer brands, including Unilever, Nestle, Coca Cola and Danone. It said it had more than 350,000 sellers in less than 12 months. Of those, 75,000 are buying inventory using the BNPL feature, which has a one- to two-week shelf life for fast-moving products.
Its users are typically last-mile micro-sellers who buy between $50 and $300 of each brand’s products each week. Fairbanc also sponsors small retailers that sell smartphones.
According to a survey conducted by Unilever and Fairbanc, 80% of Fairbanc users are unbanked, meaning they do not have a bank account, and about 70% are women. The startup claims merchants have increased their sales by an average of 35%.
Fairbanc was founded in 2019 by Mir Haque, a graduate of the Wharton School, who first tested the startup in Bangladesh before choosing Indonesia as its main market. Haque was born in Bangladesh and is described by TechCrunch as the “birthplace of microfinance”. After living and working in the United States for nearly 25 years, he returned to Bangladesh in 2018 to digitize microcredit, with the goal of creating a digital credit platform for micro-merchants. requires smartphone or digital.
“After some market research, I saw an opportunity for large scale ecosystems to lend in the offline marketplace with Unilever by integrating our API with their own app sold by resellers. their offline customers use to take orders from merchants,” he said. “But it failed in Bangladesh because the market was oversaturated with microfinance, with many merchants having overlapping and overdue loans.”
Therefore, Fairbanc decided to pilot with Unilever in Indonesia. Haque says that led to 35% sales growth for nearly 500 small merchants with no defaults in one year. “Because merchants must pay the previous week’s BNPL to place an order for the current week, this ‘stop supply until refund’ model results in very low default rates,” he said.
In chasing the same merchant,” Haque said. “I guess for this reason the banks in Bangladesh are not as excited as the Indonesian banks.”
Before founding Fairbanc, Haque worked at companies including Google, Adobe, McKinsey and Deutsche Bank. The company’s founding team also includes Kevin O’Brien, former chief technology officer of nonprofit lending platform Kiva, and Thomas Schumacher, co-founder of emerging markets micro-lending platform Tala.
