Startup of the Day: Indonesian fintech Finfra, founded by two Baltic natives

Indonesia-based Finfra, the one-stop shop for companies, was founded in 2022 as a consumer lending company. The startup enables under banked businesses and non-financial digital platforms to embed financial products and services, particularly credit lending, into their distribution channels. In 2021, Finfra’s founders secured the full lending license in Indonesia, the only European-owned platform to do so. The startup has already scored over 2 million individuals and businesses. In June this year, it secured an investment of $1 million.

In the Startup of the Day column, Markus Prommik and Reinis Simanovskis, co-founders of the Finfra, share more details about the startup’s idea, its product, and future plans.

Tell us about your startup. How does it work?

Founded by two Baltic natives, Markus Prommik and Reinis Simanovskis, and backed by notable European and global investors, Finfra is the one-stop shop for businesses integrating white-labeled lending products in Indonesia. Its comprehensive and API-driven infrastructure enables non-financial digital platforms to embed financial products and services, particularly credit lending, into their distribution channels. In providing an end-to-end loan management system, scoring, portfolio analytics, and access to debt capital, Finfra is transforming the lending landscape in a still-underbanked region.

How did you come up with the startup’s idea? What was the reason/motivation behind it?

My roots are in Tallinn, Estonia, but my academic journey led me to the Stockholm School of Economics in Riga. An exchange semester at the City University of Hong Kong spurred travels across Asia, including Laos, the Philippines, and Thailand. During these travels, I noticed the rise of affordable Chinese smartphones. Recognizing the success of mobile-first financial services in the Baltics, I saw a clear opportunity for a similar wave in Asia, particularly to democratize credit access,

the co-founder, Markus Prommik told us.

Post-graduation, I initially settled in Singapore, but soon identified Indonesia as a hotspot for my idea. Reinis, a former classmate from Riga, joined me after his stint in Africa. In 2017, we launched a B2C consumer finance lending company, Danabijak. At that time, I was at the age of 22 and with a seed capital of about $25,000. Our acceptance into the Plug and Play startup accelerator program was pivotal; it gave us a platform to foster key relationships and validate our concept. While our initial processes were manual, and we started with just an MVP, by 2020, with our rapidly expanding team, we improved unit economics and achieved profitability.

How long did it take to reach the prototype or MVP? What did you encounter?

In 2021, we achieved a significant milestone by securing our full lending license in Indonesia, the only European-owned platform to do so. After that, we received numerous inbound requests from other startups and international lenders expressing interest in partnering with us. Since early 2022, it has been clear to us that the future of our business lies in Finfra.

Initially, our approach was bespoke, tailoring to each partner’s needs. However, we evolved, streamlining partner onboarding through API connections. On the front end, we are confident that we have everything set up and ready to go, but we are continually developing our capabilities as we gain new clients and explore new areas. For example, we could offer specific loan products for farmers, logistics platforms, or merchant accounting apps,

Reinis Simanovskis added.

We had to find alternative data sources, and this is where our expertise in API integration comes into play. With embedded lending, we can integrate directly with platforms to access their valuable non-public data, which can significantly improve our credit scoring accuracy.

In fact, we have already scored over 2 million individuals and businesses. This data-driven approach allows us to offer a valuable proposition to platforms that want to launch lending services but have little to no knowledge of lending.

When exactly did you launch your product? Or when the launch is planned?

Having started testing Finfra’s business model back in 2020, last year we launched the brand, and in 2023 the entity was established.

Tell us about the startup’s business model. How do you monetize your product?

To date, our sales approach has leaned on referrals, personal connections, and introductions from VCs who connect us with their portfolio companies. We categorize ourselves primarily as an enterprise sales company. On average, we expect a monthly revenue of a few thousand dollars from a client, growing to about $4K-$5K by the sixth month. The entire sales cycle, from lead to deal closure, spans nearly three to four months, with an estimated six-month average order value per client of approximately $45,000.

Our revenue is derived from three main streams:

  • Fees for integration and setup.
  • A unit-based servicing fee.
  • A revenue share, where we take a percentage of the interest income earned by our clients.

What are your target markets and consumers?

Our primary clientele comprises businesses not traditionally associated with lending but keen on integrating our services. The market signals a robust demand for flexible lending options, especially in under serviced sectors, and we are keen to address this need.

Partnership with Bank Negara Indonesia (BNI), the country’s fourth-largest state-owned bank, and collaboration with Aspire, a leading fintech brand in Southeast Asia backed by investors like Sequoia, were particularly enlightening. We identified that numerous founders, both within our immediate network and through secondary connections, could benefit from what we offer. This insight significantly influenced our growth direction.

If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.

Since our product launch, we have transitioned to a post-revenue phase. To date this year, we have seen a threefold increase in our paying customers. Every month, we disburse several thousand loans.

Furthermore, our sales pipeline is robust, boasting over a thousand qualified leads and more than 50 ongoing conversations with platforms looking to launch within the next 12 months. Additionally, we have six partnerships lined up for launch before year-end.

What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.

Incorporated in Singapore, with our primary operations located in Jakarta, Indonesia, we’re also expanding our presence to Europe, with plans to open an office in Lithuania. As for now, our dedicated team comprises 19 full-time professionals, bolstered by 14 contractual employees who handle loan servicing.

Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.

Finfra initially garnered support from Plug & Play Indonesia, Chocolate Ventures, and various angel investors. In June this year, we secured an investment of $1 million. The funding round was a collaborative effort by DSX Ventures and Seedstars International Ventures, regional fintech experts Cento Ventures and Fintech Nation, Baltic-based startup support incubators FirstPick and BADideas Fund, and Silicon Valley-based Hustle Fund.

What’s next? Tell us about your future plans.

While Southeast Asia is our broader target, Indonesia will be our central market till 2025. Global outreach is projected for the late 2020s or 2030, post-maximising opportunities in Southeast Asia.

We’re committed to scaling our current business ambit before venturing into peripheral areas. While we see potential in embedded finance, encompassing realms like insurance and investments, our immediate focus remains undeterred.