Credenc, a leading education loans platform, recently announced that it has raised INR 17.8 crore (US $2.5 million) in seed funding, led by Omidyar Network India with participation from EMVC , Better Capital, and IIMK Alumni Fund. The start-up intends to build up a loan book of US $0.5 billion over the next 5 years. The capital raised shall be used to expand operations to 1,000 colleges across 50 cities over the next 2 years. Credenc also plans to hire across technology, credit and banking partnerships.
Delhi-based Credenc, founded by Avinash Kumar and Mayank Batheja in 2017, works as the digital finance desk of 200+ management colleges across 17 Indian cities. The start-up has approved loans worth INR 100+ crore (US $15 million) as yet. With more than 200 loan requests a day, Credenc undertakes a rigorous evaluation process using a proprietary AI model which tracks 15 million data points to predict the future income of students applying for loans. Industry-wide, approval for education loans can take up to 2 months, vis-a-vis Credenc which qualifies applications within a fraction of that time.
As a unique platform to finance meritorious students for their college expenses by underwriting their employability, rather than the means available to their families, Credenc is disrupting the domestic higher education financing market with its future income prediction model which ensures the best students of our country are not starved for funds for their education.
As per Credenc, 30% of Indian students’ families sell assets to fund their education. 20% borrow from local money lenders at rates as high as 3% a month. Another 30% give up on a college education. The start-up has mapped 70,000 job roles across 50,000 companies in India and developed a deep understanding of employability in India, to change the status quo. After providing financial support, Credenc works with students and helps them with employability services, handholding applicants as they transition from student to professional life.
Speaking of the round of funding, Mayank Batheja, Co-founder, Credenc, said, “Currently only 5% of the ~$50 billion annual spend on college tuition fee is financed by organised lenders. We believe this penetration should be at least 15%,” to which Avinash Kumar, Co-founder added, “Our target segment consists of the top 10,000 colleges in India, and we would like to ensure that we are available for the top 10% of students from these colleges.”
“Credenc’ differentiated lending model provides financing to deserving students, which helps them access post-secondary education and get meaningful employment. Avinash and Mayank’s solution will help in creating a level playing field for students from the Next Half Billion population by making quality education more accessible. We see this partnership as an opportunity to demonstrate that a highly impactful and profitable business can be built in the large and untapped higher education financing space,” said Sarvesh Kanodia, Associate, Omidyar Network India.
“Credenc is solving a multi-billion dollar domestic education financing problem, putting students’ abilities at the center. Their distribution model of being the ‘financial aid office’ at colleges is spot on and will unlock a large market opportunity, creating a win-win for students and colleges,” said Vaibhav Domkundwar, CEO, Better Capital, to which Melissa Frakman, Managing Partner, EMVC, added, “The innovation that Credenc has developed — and is already deploying across institutions in India — has the opportunity to change the course of retail financial services in India, unlocking financing and other resources for millions of creditworthy, high-potential students who otherwise wouldn’t have access to credit. Growing the massive workforce required to meet India’s skilled labour demand is a challenge that’s fundamental to India’s economic growth and Credenc is solving this with new technology and distribution.”
The annual spend on college fees in India is US $50 billion or INR 3.5+ lakh crore, of which only 5% is financed by organised lenders. For the USA, this figure stands at more than 60%. Credenc intends to change the segment perception and reduce underwriting risk basis its future employability score, which will help this percentage go up to 15%, as it partners with more than 3,000 colleges in 100+ cities to build an INR 3,500+ crore loan book in the next 5 years.