Startup – Studying abroad remains a dream for many Indian students. Sending their children abroad to receive a better education and later being placed with a hefty package far in excess of what they would have earned in India is still a sight that brings tears of joy to both parents and child. After China, India is the second largest source of international students. According to UNESCO, India accounted for 750,000 of the 5 million international students in 2018. Between 2000 and 2016, the number of Indians studying abroad increased by 22%.
Having said that, travelling abroad is not the same as planning a vacation. Years of planning, identifying colleges, applying for multiple tests, and most importantly, amassing colossal sums of money that are unmatched by even the most prestigious institutes in India is a taxing task. Two IIT alumni founded Leap Finance to address these issues and provide a solution under one roof. Vaibhav Singh, co-founder of Leap Finance and Leap Scholar, speaks with Entrepreneur India about what inspired them to build the startup and whether the pandemic has killed interest in international education.
Singh began his career at Deutsche Bank, where he worked across teams and geographies after graduating from IIT-Kharagpur. He chose to be a part of India’s startup ecosystem upon his return from Sydney, with a focus on the fintech space.
After working at Capital Float and then as a founding team member of InCred, Singh and co-founder Arnav Kumar identified a gap that had always existed but was never filled. It was a lengthy process that took place in order to process loans to students wishing to study abroad. While examining these issues, the duo recognized the importance of additional services that assist students in further refining their choices when it comes to studying abroad.
“At my previous company, we assisted over 3,000 students in securing funding for their study abroad dreams by developing an educational lending product for international students. I recognized a genuine need for a truly comprehensive solution that satisfies the requirements of a student aspiring to study abroad,” Singh explained.
He continued by stating that the study abroad market is still largely offline and extremely fragmented, with multiple providers serving each stage of the value chain, resulting in a very disjointed experience for students.
“Studying abroad is likely the most significant decision a 22-23-year-old student will make in their lifetime, and the need for a one-stop-shop platform that addresses all of their concerns remains unmet. That was the vision for Leap that my co-founder Arnav and I had – to create a truly digital, all-encompassing community and platform for Indian study abroad aspirants that offered specialized products at every stage,” he added.
Loan Without Collateral
Leap Finance is a Bengaluru-based overseas education guidance and financing platform founded in 2019. The startup provides students with dollar loans based on their future earnings. At the moment, the startup is disbursing collateral-free loans at a rate of between 9% and 11%.
Apart from assisting with financial matters, Leap Finance is developing a community where students can discuss their plans, ask questions, and connect with a peer support group as they navigate their study abroad journey.
“Our student community has very specific needs, and we’ve developed tailored products to meet those needs – across all our products, we’ve assisted over 20,000 students on their study abroad journey,” he claimed.
The startup uses a combination of publicly available and proprietary data, totaling over 300 data points on each student, to create a unique profile for each student’s credit application based on a variety of factors such as their academic grades, university of choice, and programme of study. The startup then uses this data to determine the student’s repayment capacity and to make the loan.
This enables students from lower socioeconomic backgrounds to obtain loans. However, the startup did not disclose how it intends to recover defaulted student loans.
Sequoia Capital India has backed the startup, which recently raised $17 million in a Series A round led by Jungle Ventures.
To shed light on its competitors, Singh stated that they face competition at each stage of the product’s lifecycle, such as for study abroad admissions counselling, where IDP is the market leader. Singh views Credila as a competitor in the educational loan market.
Pandemic Put an End to Interest in Study Abroad?
The pandemic has rendered the world immobile. It has demolished almost all of the plans devised by people worldwide prior to 2020. Traditional education has converged with technology, resulting in the delivery of online education. When international borders were closed and education appeared to have permanently relocated, it’s a foregone conclusion that interest in studying abroad must have waned for several years. Surprisingly, this is not true of India. According to a survey conducted by iSchoolConnect Inc, 91% of Indian students wish to study abroad.
Singh stated that demand for study abroad continues to be strong, and the trend of high-potential students migrating from emerging countries to Anglo-Saxon countries is just beginning.
“We believe it is here to stay, and while the pandemic may have impacted the sector, we have seen that demand from aspirational Indian students remains strong.”
Except for a few spaces, the pandemic has wreaked havoc on businesses across the sector. Ed-tech is one of the sectors that has experienced significant growth as classes have moved online.
Singh explained that last year’s slight slowdown and deferral of demand for study abroad enabled them to double down on their products and hiring, laying the groundwork for a strong future. Additionally, he stated that the transition from offline to online instruction aided them in capitalizing on their online test prep products.