NBFC Varthana raised the funding from US-based global investment firm MicroVest by issuing non-convertible debentures
Varthana aims is to serve more than 10,000 schools by the end of this financial year: CEO Steve Hardgrave
The Bengaluru-based startup is a non-banking finance company (NBFC) that offers credit to students and low-budget private schools
Education-focused fintech platform Varthana has raised $7 Mn (INR 56 Cr) in a debt funding round from US-based global investment firm MicroVest by issuing non-convertible debentures.
The startup will use the funding to scale up credit facilities for low-budget private schools affected by pandemic-induced disruptions. Varthana will also deploy the funding to ‘transform’ affordable education in rural India.
“…The low-budget schools in which we invest are counting on inclusive financial services to get back to business following the unprecedented challenges faced during the pandemic. With the support of MicroVest, Varthana is now in a stronger position to play a constructive role in aiding these affordable schools,” said Varthana CEO and cofounder Steve Hardgrave.
Chiming in, MicroVest CEO Joshua Moraczewski said, “MicroVest is proud to support Varthana on its mission to help low-income students and their families in India access quality education… We are committed to supporting responsible financial institutions like Varthana. During this challenging post-COVID environment, their efforts are more important than ever.”
Founded in 2013 by Brajesh Mishra and Hardgrave, the Bengaluru-based startup is a non-banking finance company (NBFC) that offers credit to students and low-budget private schools. Essentially, it caters to the needs of affordable private schools through financial support and academic support (via implementation of digital learning tools and teaching methods).
Varthana has so far disbursed more than 15,000 loans across 15 states and union territories of the country. It claims to have helped more than 8,500 schools in expansion and renovation. It has also partnered around 750 student loan institutes across the country.
With a presence in more than 11,000 pin codes through 40 branches and 150 spokes, the startup touts itself as the fastest growing student loan company in India.
Hardgrave also said that the startup plans to cover more than 10,000 schools by the end of the current financial year. Additionally, the fintech player aims to make education accessible to over 10 Mn students by 2025.
In the student loan category, Varthana competes with the likes of Leap Finance and Eduvanz. In the educational infrastructure loan space, it locks horns with players such as Auxilo, Ugro Capital, EnableCap, IFSC, among others.
School infrastructure-focused credit products have seen renewed adoption in recent times. As the pandemic swept the world, physical classes came to a grinding halt as schools adopted the digital model. The financial disruption caused by the COVID-19 affected many schools, especially low-budget schools.
As banks are shy of lending to these smaller schools owing to higher operating costs and credit risks, the emerging startups are filling in the gap to allow these institutions to improve the quality of education and expand capacity.
According to government data, the outstanding education loans of Indian banks stood at INR 89,537 Cr at the end of September 2022, compared with INR 79,917 Cr a year ago.
Overall, the fintech space continues to make major strides. The sector emerged as the most attractive bet for investors in India in 2022, raising $4.5 Bn across 250 deals.
Earlier on January 3, rural India-focused lending startup SarvaGram closed a $35 Mn Series C funding round from Elevar Equity, Elevation Capital, Temasek and TVS Capital Funds.
In December 2022, HDFC Bank acquired a 7.75% stake in fintech startup Mintoak in an all-cash deal, while another fintech player Kredmint raised about $2 Mn in a funding round from multiple VC firms.