BENGALURU : Credenc, an online platform for education loans, on Tuesday announced a fundraise of Rs17.8 crore ($2.5 million) in a seed-round, led by Omidyar Network India with participation from fintech focused venture capital firm EMVC , Better Capital, and IIMK Alumni Fund.
The startup will use the funding to add support for 1,000 colleges across 50 cities over the next 2 years. Credenc also plans to hire across technology, credit and banking partnerships. The startup intends to build up a loan book of $500,000 over the next 5 years, according to a statement.
Delhi-based Credenc, founded by Avinash Kumar and Mayank Batheja in 2017, provides finance to over 200 management colleges across 17 Indian cities. The startup has approved loans worth Rs100 ($15 million) to date. With more than 200 loan requests a day, Credenc claims to undertake a rigorous evaluation process using its proprietary underwriting model which tracks 15 million data points to predict the future income of students applying for loans.
Approval for education loans can take up to 2 months, for most loans via banks and other financial offerings, but claims to complete credit check of applicants within a fraction of that time. Credenc to underwrite student loans based on an applicant’s employability, rather than the means available to their families.
According to Credenc data, around 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 startup has mapped 70,000 job roles across 50,000 companies in India to develop an understanding of employability in India. After providing financial support, Credenc also works with students and helps them with employability services, handholding applicants as they transition from student to professional life.
According to Mayank Batheja, co-founder, Credenc, currently only 5% of the $50 billion annual spends on college tuition fees is financed by organized lenders. “We believe this penetration should be at least 15%,” he added.
“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.