Delhi-based digital education loan startup Credenc has raised $2.5 million in a seed funding round led by investment firm Omidyar Network India.
Other investors who participated in the round include EMV Capital, Better Capital, and Indian Institute of Management – Kozhikode (IIMK) Alumni Fund.
Founded by Avinash Kumar and Mayank Batheja in 2017, Credenc works as the digital finance desk of more than 200 management colleges across 17 cities in India. The company undertakes a rigorous evaluation process for disbursing the loan using a proprietary artificial intelligence model which tracks 15 million data points to predict the future income of students applying for loans.
Credenc claims it has approved loans worth $15 million till now and receives more than 200 loan requests per day. The company said that it intends to build up a loan book of $500 million over the next five years.
Meanwhile, Credenc plans to use the new funds to expand operations to 1000 colleges across 50 cities over the next two years, and also hire employees across technology, credit and banking partnerships.
Commenting on the recent funding, Credenc’s co-founder Mayank Batheja said,
“Currently, only 5% of the $50 billion annual spends on college tuition fee is financed by organized lenders. We believe this penetration should be at least 15%.”
The fact that the annual spend on college fees in India is around $50 billion, of which only 5% is financed by organized lenders is appalling, especially when compared with the US, where the rate is around 60% of their annual total fees. Credenc believes this needs change and that the education loan penetration rate should be at least 15%.
Talking about its target and future plans, Credenc’s co-founder Avinash Kumar also commented saying,
“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.”
Lauding the works of Credenc and expressing its faith in the company in creating a level playing field in education financing space, Sarvesh Kanodia, Associate, Omidyar Network India, said,
“Credenc’s 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.”
Credenc claims to have mapped 70,000 job roles across 50,000 companies in India. After providing financial support, the startup works with students and helps them with employability services, handholding applicants as they transition from student to professional life. Hope the latest investment will enable the company to fulfil its plans to expand its operations and continue to change the lives of future workforce in India.