UK fintech startup has raised a whopping $240 million funding round, certainly one of the largest by a UK company this year. The company provides loans to international students from emerging markets, enabling them to study at business schools in the US, the UK and Europe.
The fundraise includes a $40 million Series C equity round led by London’s Index Ventures, with participation from Balderton Capital and , an accelerator in Africa; and a $200 million debt facility led by an unnamed “global investment bank”.
With the number of international students forecast to reach 8 million by 2025 Prodigy Finance is clearly sitting on a growing market.
The company founded what it describes as the world’s first globally enforceable credit model, and works only with leading universities. The annual repayment rate of over 99% is ensured by crowdfunding loans from alumni from universities such as such as INSEAD, London Business School, Cambridge Judge Business School, Stanford University and Harvard University.
That means students are ‘reputationally invested’ in their own education, and it allows alumni to support their alma mater. Qualified investors, and the alumni, also earn a financial return. It’s Philanthropy 2.0, if you will.
Prodigy assesses applicants based on their projected earnings, not their credit history. That opens up education to literally anyone, and is especially geared to those from emerging markets.
In the last ten years it’s provided more than $325 million in funding to over 7,100 students, 78 per cent of whom come from emerging markets. The firm is currently increasing its US footprint, where international students contributed $32.8 billion and 400,000 jobs to the US economy during the 2015-2016 academic year.
Cameron Stevens, Founder and CEO of Prodigy Finance, said: “Students from emerging economies such as China, Brazil and India face challenges in accessing financing for education, even with high credentials and excellent credit quality. This investment will help us double the size of our student portfolio. We believe in financial inclusion and talent mobility, and look forward to continuing to help international students break the funding barrier and further their education at a top international university.”
Ilian Mihov, Dean of INSEAD, said: “Prodigy Finance has worked with INSEAD for almost ten years now. About 25% of our students are funded by Prodigy Finance loans and they come from all over the world, many from countries where it would be difficult to get a bank loan or other forms of financing. It’s an important source of funding at INSEAD and helps contribute to diversity, as we have over 90 different nationalities represented. Diversity is essential to our DNA, as it’s a source of creativity and understanding.”
Featured Image: BrianAJackson/Getty Images