Capital India, a company that offers finance to SME and retail customers, will invest $25 million in education loan startup Credenc.
Credenc is a Delhi-based technology-led education loans platform set up in 2017 and currently works with around 1,000 colleges across 17 cities. The fresh capital infused via both debt and equity will help Credenc expand its loan portfolio in a sector that is booming in India, and more so after technology adoption expanded the scope in past 18 months.
S.K. Narvar, promoter of Capital India, said the annual spend on college fees in India is around Rs3.5 lakh crore, of which only 5% is financed by organised lenders. Narvar said the founders will continue to run operations for Credenc “as we would not want to disrupt the working of the organisation and believe they know the business best.”
“Our partnership with Capital India is very strategic, it will give us both balance sheet and cost of capital advantage which will help in disrupting the education lending segment by providing loans to students who were until now ignored, helping lakhs of Indian students achieve their potential,” said Avinash Kumar, co-founder, Credenc.
The start-up undertakes a rigorous evaluation process using a proprietary artificial intelligence (AI) model, “which tracks 15 million data points to predict the future income of students applying for loans.” Lending is based on students’ potential and future income instead of the existing financial capability of the family, which is typically the primary factor considered by traditional education lenders.
Credenc offers education loans covering K-12 school fees, online up-skilling courses, higher education as well as study-abroad courses and is looking to lend Rs3,000 crore by 2025.
Source: Mint