The number of international students has risen worldwide and is forecast to reach 8 million by 2025.
- International students contributed $32.8 billion and 400,000 jobs to the US economy during the 2015-2016 academic year.
- Prodigy Finance’s fundraise includes a $40 million Series C equity round led by international venture capital firm Index Ventures; and a $200 million debt facility led by a global investment bank.
Prodigy Finance, a global lending platform that provides postgraduate loans to international students with no alternative access to finance, today announces a $240 million fundraise. This includes a $40 million Series C equity round led by international venture capital firm Index Ventures, with participation from Balderton Capital and AlphaCode; and a $200 million debt facility led by a global investment bank.
Prodigy Finance’s unique global credit model assesses applicants based on projected earnings rather than historical credit, allowing the company to provide funding to students without collateral, a cosigner or guarantor. To date, more than 80 percent of its borrowers have had no alternative access to financing. It also enables the alumni of top schools to help fund students from their alma mater or home country, while earning a financial return.
The financing announced today will accelerate the company’s expansion in the United States; allowing Prodigy Finance to provide loans to more international students by adding further business, engineering, law and public policy courses and new universities to the platform, which already include top schools from the Financial Times and US News & World Report’s rankings such as Harvard University, Stanford University, Columbia University and The University of Pennsylvania to name a few.
Cameron Stevens, Founder and Chief Executive Officer 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. The 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 school”.
Neil Rimer, Partner at Index Ventures, said: “Prodigy Finance is opening the doors of the world's top universities to students who were previously shut out, because they couldn't fund their education. Prodigy Finance is an example of an entrepreneurial financial services company using an innovative model to offer something of great value that is not available from traditional lenders. Every decade, the number of international students doubles and our hope is that Prodigy Finance will help accelerate that growth. Our planet sorely needs more educated citizens of the world.”
Market failure when it comes to postgraduate financing stems from banks and traditional financiers being unable to lend internationally; they are not structured to assess foreign risk nor enforce loan repayment across borders. The economic crisis exacerbated this further, as many banks withdrew from the postgraduate lending sector due to associated risks. Traditional financiers also assess a student’s historic earnings to determine viability, often leading to insufficient loan amounts with high interest rates or disproportionate levels of security.
Stevens added: “International students play a key role in the graduate school ecosystem by contributing revenue and improving the institution’s overall diversity; a determining factor when it comes to league tables and global rankings.”
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.”
Many graduate schools have caps on the charge for domestic students to undertake postgraduate degrees, which leaves the schools even more reliant on higher financial contributions from international applicants for the same courses. In 2015/16, the US was host to 1.043 million international students, up from 565,039 in 2004/05.
Ten Years of Educational Finance Solutions
Prodigy Finance has provided more than $325 million in funding to over 7,100 students, 78 percent of whom come from emerging markets. To date, 2,824 of borrowers have gone on to study at US schools such as Stanford Business School, Harvard Kennedy School, University of Chicago Booth School of Business and the University of Michigan.
Orgil Sedvanchig, a Prodigy Finance student borrower, said: “Prodigy Finance was essential in financing my degree at Columbia Business School. It was the backbone to what I built financing around. In time, I would also like to return to Mongolia and apply the concepts that I learnt through an MBA to the developing frontier markets in South East Asia.”
Stevens concluded: “As an international student myself, the challenge of getting into a top university was difficult enough, but funding it shouldn’t have been the primary concern. We’re celebrating our tenth anniversary this year, and while the political and economic climates may change, it doesn’t affect where the brightest want to study. We’re excited about this investment as it will allow us to continue to grow and ensure there are no barriers to achieving academic potential.”
About Prodigy Finance:
Prodigy Finance is a lending platform that provides postgraduate loans to international students from 150 countries attending the world’s top universities, who would otherwise have no alternative access to finance. The loans are collectively funded by a community of alumni, institutional investors and qualified private investors who receive both a financial and social return. Since 2007, Prodigy Finance has provided more than US$325 million in funding to over 7,100 students, without ever having to write off a loan. Funding shouldn't be a barrier to education.