Prodigy Finance, a fin-tech startup, and online student loan lender, has announced that they have raised $240 million in equity and debt funding, according to a press release issued on August 21st.
The student loan company is based in the United Kingdom, but thanks to their new round of funding, Prodigy Finance will look for an expansion into the United States.
The fundraising round includes a $40 million Series C equity round spearheaded by international venture capital firm Index Ventures. Also involved in the Series C funding are Balderton Capital and AlphaCode.
The remaining money from the $240 million fundraiser is coming from a leading global investment bank, according to Prodigy Finance. That investment bank is giving the online lending company $200 million in debt funding.
Prodigy Finance operates on a business model that looks to offer loans to postgraduate international students studying at American, English, or other European higher education institutions. Many of these students would typically be denied for student loans from traditional financial institutions, who evaluate lending risk through credit history and are usually hesitant to lend to international students with little local credit history.
Prodigy Finance analyzes lender risk through a unique global credit model that evaluates potential borrowers based on their projected earnings, not their creditworthiness. The company also evaluates the borrower’s credit score from their home country. This model allows the UK-based student loan company to distribute loans to borrowers without collateral, a cosigner, or a guarantor. According to Prodigy Finance, more than 80 percent of their borrowers have had no other options for student loans.
The Prodigy Finance model also enables investors and alumni from top institutions to help students, potentially from their alma-mater or home country, while also bringing in a financial return.
Cameron Stevens, the Founder and CEO of Prodigy Finance, gave the following statement for the press release: “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. We saw a market failure in international lending and have spent the last decade rectifying this problem. 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.”
What does the $240 million investment mean for Prodigy Finance? According to the press release, the money will help bulk up the student loan company’s operation in the U.S. Additionally, the UK-based online lender will now be able to provide even more funding for student loan borrowers looking to get their postgraduate degree in fields such as business, engineering, law, and public policy. Prodigy Finance will look to provide financing for students at all of the top global institutions including London Business School, Stanford University, and Harvard University.
According to Prodigy Finance, the online student loan lender has funded upwards of $325 million in educational loans to over 7,1000 students. Impressively, Prodigy Finance claims to have never written off a loan. The UK-based fin-tech company has now been around for 10 years.
In recent weeks, the student loan industry has been on fire in terms of receiving additional funding. Most recently, Sallie Mae received $2.16 million in taxpayer funded grant money from the state of Delaware to add 285 new employees and to renovate a 57,000 square-foot office in the First State. On August 16th, Lendkey, a leading lending partner for banks and credit unions, announced that they were able to raise $13 million in Series C funding from a group of investors including North Atlantic Capital, DFJ, and Gotham Ventures. Finally on August 15th, LendEDU reported that MPOWER Finance, an online lender that specializes in student loans for international students, had launched a $100 million debt financing round to keep up with the demand for student loans.
LendEDU also reported in early August that student loan refinancing company Earnest is teaming up with Barclays to find a buyer willing to spend $200 million on the fin-tech student loan company.
Author: Andrew Rombach
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