Digital Drive Expands Education Funding Options
Bombay: Education loan provider Eduvanz said the digitization of education triggered by a pandemic has improved access to skills upgrading courses for residents of small towns. While the pandemic enhanced digitization, digital education lent itself to easier financing, which widened the market for certain courses.
Eduvanz is a new-age digital finance company specializing in zero-interest subsidy loans to educational institutions. Another unique selling proposition is that its underwriting decision is based on the institution’s investment insurance. Unlike a traditional education financier who focuses on high-value international programs or long-term courses, Eduvanz focuses on shorter courses where trained and even employed young people improve their skills on subjects such as as data science, analytics or blockchain.
Talking to YOU, Eduvanz financing co-founder and CEO Varun Chopra said the pandemic has led to the digitization of edtech sector. “Even with the big education brands, classroom programs have started to go digital. Students in Tier 2 and 3 cities now apply for online programs as they no longer have to deal with the logistics of accommodation and travel. This digitization has opened up the same educational funding opportunities as e-commerce for retail across the country, he added.
Eduvanz has raised $ 5 million in Series A funding from Sequoia. Although it has a license from a non-bank finance company, it is not “ loaded with books ” and lends in partnership with Fullerton India, Aditya Birla Capital and IDFC First Bank. But given the growth opportunity, Chopra says the company will raise new capital. He also leveraged his own capital base to raise $ 12 billion in debt. “We would like to have a billion dollar book in four years,” Chopra said.
The company has disbursed loans of over Rs 400 crore, and nearly Rs 300 crore in loans have been repaid. “These are 18 to 20 month loans and we’ve already seen two to three repayment cycles and the impact of Covid,” Chopra said. Because Eduvanz focuses on the institution and its investments, it can lend without collateral or the need to underwrite based on the parents or the student’s background. “The heart of our business is training and skills development. Today 70-75% of our loans are for employment-related education, ”said Chopra. This includes courses with placement guarantees and income sharing agreements.