This startup provides unsecured loans to Indian students studying abroad

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Studying abroad is always one of the dreams close to the heart of Indians. Sending their children abroad, to get a better education and later receive a big package, far above what they would have earned in India, is always an image that makes both parents cry for joy as well as ‘child. India is the second largest source of international students after China. According to UNESCO, in 2018, of the 5 million international students, 750,000 came from India. From 2000 to 2016, the number of Indians going abroad to study increased by 22%.

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Co-founders of Lead Finance: Vaibhav and Arnav

However, going abroad is not like planning a vacation. It takes years of planning, researching universities, applying for multiple tests, and most importantly raising huge sums of money that don’t even match the high end institutes in India, which is a task. arduous. To meet these tasks and provide a solution under one roof, two IIT alumni created Leap Finance. In an interaction with Entrepreneur India, Vaibhav Singh, co-founder of Leap Finance and Leap Scholar, explains what inspired them to create the startup and whether the pandemic has killed interest in education abroad.

Towards FinTech

After graduating from IIT-Kharagpur, Singh spent the early years of his career at Deutsche Bank, working in teams and geographies. After returning to India from Sydney, he chose to be part of India’s startup ecosystem with an eye on the fintech space.

After working at Capital Float and then as a founding team at InCred, Singh and Arnav Kumar (co-founder) discovered a gap that was still there, but no one cared. The process of processing loans for students who wish to study abroad has taken a long time. Looking at these issues, the duo also realized the importance of other services that help students better guide their choices when it comes to going abroad.

“When creating the educational loan product for international students in my previous company, we helped over 3,000 students secure funding for their dream of studying abroad. I realized there was a real need for a truly comprehensive solution that would meet the requirements of an aspiring student to study abroad, ”Singh said.

He continued that the study abroad market is still largely offline, incredibly fragmented, with multiple vendors serving every step of the value chain, ultimately making the experience very disjointed for students.

“Studying abroad is probably the most important decision a 22-23 year old student will make in their lifetime, and the need for a one-stop-shop platform that solves all of their problems isn’t always. unsatisfied. This is the vision my co-founder Arnav and I had for Leap – to want to create a truly digital and global community and platform for Indian study abroad aspirants who provide specialized products every step of the way, ” he added.

Unsecured loan

Leap Finance is an overseas education focused referral and funding platform founded in 2019 and headquartered in Bangalore. The startup offers students loans in dollars based on their future income. The startup currently provides unsecured loans at an interest rate of between 9 and 11%.

Leap Finance, in addition to helping with finance, also creates a community where students discuss their plans, ask questions, and find a peer support group throughout their study abroad trip.

“Our student community has very specific needs, and we have developed custom products to meet those needs – across all of our products, we have served over 20,000 students on their study abroad trip.” , did he declare.

The startup uses a mix of publicly available and proprietary data, over 300 data points on each student, which allows it to create a unique profile for each student’s credit application, based on several factors, including their grades. academic, his choice of university and program. The startup then uses this information to assess the student’s repayment capabilities and grant the loan.

This allows students from lower financial strata to qualify for loans. However, the startup did not disclose how it plans to collect bad debts from students.

The startup was backed by Sequoia Capital India and recently raised $ 17 million in a Series A round led by Jungle Ventures.

Shedding light on its competitors, Singh said that at every step of every product they have competitors, such as for study abroad admission advice, IDP is the biggest player in the market. In terms of educational loans, Singh sees Credila as his competitor.

Pandemic killed abroad Interest in the study?

The pandemic has brought the world to a standstill. It crushed almost every project that people around the world had thought of before 2020. Traditional education converged with technology and offered e-learning. When international borders were closed and education seemed to have shifted permanently, it is evident that the urge to study abroad must have faded for a few years. Surprisingly, this is not the case with India. According to an iSchoolConnect Inc survey, 91% of Indians want to study abroad.

Singh said demand in the study abroad market continues to be strong, and the migration of high potential students from emerging countries to Anglo-Saxon countries is a trend that is only just beginning.

“We believe it is here to stay, and although the pandemic may have caused turmoil in the industry, we have seen that demand for ambitious Indian students continues to remain strong.”

The pandemic has wreaked havoc on companies in the sector, with the exception of a few places. Ed-tech is one of the spaces that has seen significant growth as courses move online.

Singh said the slight slowdown and postponement of demand for study abroad last year allowed them to double their revenues and hires, and lay a solid foundation. He added that the move from offline to online education has helped them capitalize on their online test preparation products.

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