Capital India, a financial conglomerate, has invested USD 25 million in a mix of equity & debt in Credenc, a fintech-focused on education loans. With this investment, Credenc is looking to build a loan book of $400 million by 2025.
The New Delhi-based Credenc, founded by Avinash Kumar and Mayank Batheja in 2017, works as the digital finance desk for 1000+ colleges across 17 cities in India.
S K Narvar, promoter of Capital India, said, “The annual spend on college fees in India is around $50 billion of which organized lenders finance only 5%. With Credenc, Capital India intends to change the segment perception and reduce underwriting risk basis Credenc’s future employability score. Also, the founders will continue to run operations for Credenc as we would not want to disrupt the organization’s working and believe they know the business best.”
Credenc has a rigorous evaluation process using a proprietary artificial intelligence model that tracks 15 million data points to predict students’ future income applying for loans.
The fintech provides financial assistance based on student potential and future income instead of the family’s existing financial capability, which is typically the primary factor considered by traditional education lenders.
Avinash Kumar, Co-founder, Credenc said, “Our partnership will provide a balance sheet and cost of capital advantage that will disrupt the education lending segment by providing loans to lakhs of Indian students achieve their potential.”
Credenc offers education loans covering K-12 school fees, online upskilling courses, higher education, and study abroad courses at the click of a button and will soon launch India’s first student-focused neo bank. It is currently developing the entire student education ecosystem helping students & parents with credit, accommodation, employability, savings, forex, and investments on a mobile app.
The pandemic has triggered the rise of education loans in India. Many fintechs focus on providing credit-related assistance to needy students, thus leading to an investment spree into the segment.
For example, last year, Sequoia Capital invested $5 million in Mumbai-based fintech startup Eduvanz. Other fintechs are Credelia and Shiksha Finance.
GyanDhan, Leap Finance, and Propelld are a few other fintechs helping provide education loans to the needy.