Prodigy Finance, a UK fintech business that helps fund international students studying abroad, has raised $240 million (£186 million) in debt and equity funding to expand further. The company raised $40 million in equity funding from VC firms Index Ventures and Balderton Capital in London, as well as African fintech accelerator AlphaCode. An additional $200 million debt facility is supporting Prodigy Finance’s customers from emerging markets fund their higher education.
This global investment bank is yet to be named.
Prodigy was founded in 2007, and has since financed $325 million of loans for 7,100 students on its platform. Prodigy’s customer base is mostly students from India, China and countries in Africa, who have secured admission in top universities around the world. The London start-up connects these post-graduate students with alumni who will loan them money based on future earning potential.
While this has been the business model for close to a decade, this new injection of investment will change the laissez-faire, community-led approach to funding that has helped organically pair students seeking funding with alumni who can afford investing in their future.
Prodigy has partnered with universities around the world including London Business School, Oxford, Cambridge, INSEAD, Stanford, Wharton, and Harvard. The biggest markets for international students applying for loans are India, Brazil, Russia, China, and Turkey; markets that traditionally don’t offer many options for student loans.
While there are multiple funding options for local students in the UK, US, France or Australia, these options don’t extend to international students coming in. These students are stuck, without options from their home countries or their host countries, which can be a real problem for universities that rely on foreign students to stay afloat in highly competitive times.
According to statistics from INSEAD, about a fourth of the tertiary institute’s 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. This offers the business school a wider pool of talented students, helping add to INSEAD’s diversity.
In terms of subject diversity, most of Prodigy Finance’s loans go towards MBA students but this funding injection could help the company widen its pool to include students pursuing STEM subjects, most likely from 2018.
Prodigy will use the $40 million in equity funding to boost its tech capabilities with more technical, engineering and business development staff. The start-up also aims to break further into the American market, which is a hotbed for international students.