Education-loan platform Credenc has raised Rs 17.8 crore ($2.5 million) in a seed funding round led by Omidyar Network India, with participation from EMVC, Better Capital, and IIMK Alumni Fund. The start-up intends to build up a loan book of $500 million over the next five years.
Delhi-based Credenc, founded by Avinash Kumar and Mayank Batheja in 2017, works as the digital finance desk of 200-plus management colleges across 17 Indian cities. The enterprise has approved loans worth over Rs 100 crore ($15 million) so far.
The capital raised shall be used to expand operations to 1,000 colleges across 50 cities over the next two years. Credenc also plans to hire across technology, credit and banking partnerships. With more than 200 loan requests a day, the firm undertakes a rigorous evaluation process using a proprietary AI model that tracks 15 million data points to predict the future income of students applying for loans.
As per Credenc, the families of about 30 per cent of Indian students sell assets to fund their education, 20 per cent borrow from local money lenders at rates as high as three per cent a month. Another 30 per cent give up on a college education. The start-up has mapped 70,000 job roles across 50,000 companies in India and developed a deep understanding of employability in India. After providing financial support, Credenc works with students and helps them with employability services, handholding applicants as they transition from student to professional life.
Speaking about the round of funding, Mayank Batheja, Co-founder, Credenc said, “Currently only 5 per cent of the $50 billion annual spend on college tuition fee is financed by organised lenders. We believe this penetration should be at least 15%.”
Co-founder Avinash Kumar added that Credenc's target segment consists of the top 10,000 colleges in India, where it would like to cater to the top 10 per cent of the students.
The annual spend on college fees in India is $50 billion or about Rs 3.5 trillion, of which only five per cent is financed by organised lenders. In the US, this figure stands at more than 60 per cent.