Lending startup Fairbanc gets Sampoerna backing for Indonesia push

Fairbanc, a San Francisco-based fintech startup, announced it has raised an undisclosed amount of funding from 500 Startups and Indonesian billionaire Michael Sampoerna.

Sampoerna is the CEO of Sampoerna Strategic, an investment company with interests in agriculture, property, telecommunications, and finance, among others.

With the new investment, Fairbanc plans to make a bigger push into Indonesia, which hosts the fourth-largest unbanked population globally. According to the World Bank, the country has about 95 million adults who don’t have a formal account at a financial institution.

Fairbanc founder Mir Haque / Photo credit: Fairbanc

Fairbanc, launched in 2018, is taking on the opportunity with its AI-powered mobile loan and payments platform designed for small and medium-sized enterprises in emerging markets. It offers credit to unbanked merchants so they can buy products from large consumer brands.

The startup says the service doesn’t require collateral, credit history, smartphone ownership, or digital literacy. Instead, credit can be accessed through a one-time passcode sent to merchants via a text message.

“The speed and size of the micromerchant transactions make it challenging for banks to service this segment because their transactions tend to be small and largely not traced,” Khailee Ng, the managing partner of 500 Startups, said.

Fairbanc relies on data science and machine learning to automate credit scoring and risk monitoring, allowing it to provide loans instantly, according to a statement.

After completing the initial test of its service in Bangladesh in 2018, the company rolled out the platform with Unilever Indonesia through startup program Unilever Foundry. It claims that participating outlets saw a 35% growth in sales through the program.

A Shariah-compliant lender, Fairbanc has also signed a partnership with a large Indonesian Islamic organization to offer Shariah financing to its 100 million members, the statement said. It has partnered with Indonesian conglomerate Sinar Mas to extend credit to micromerchants that sell Unilever products and other fast-moving consumer goods as well.

Fairbanc was founded by Mir Haque, who previously worked at big companies such as McKinsey & Company, Deutsche Bank, and Adobe. The startup’s chief technology officer, Kevin O’Brien, held the same position at US microcredit firm Kiva. The founding team also includes Thomas Shumacher, the co-founder of California-based microlending company Tala, which also focuses on emerging markets.