Introduction:
In its pre-seed round, Palm Drive Capital, Deem Ventures, Q Business, and angel investors joined Zayn VC in raising $6.1 million for EduFi. This fintech firm helps students who are struggling to pay for their education.
Aleena Nadeem, founder and CEO of EduFi, told TechCrunch that the Singapore-based company has launched its mobile app and artificial intelligence-powered study now, pay later (SNPL) lending platform in Pakistan. In Pakistan, no student loan products are available; borrowers take out personal loans with high-interest rates and drawn-out procedures.
EduFi aims to tackle two primary challenges facing the nation—widespread poverty and low literacy rates—via its fintech platform. The shortcomings of public schools in Pakistan lead to more than 40% of children choosing private education, surpassing $14 billion in annual spending. Over half of Pakistan’s adult population also needs access to crucial financial services like insurance and bank accounts.
Nadeem, an MIT alumnus who has held positions at Goldman Sachs and Ventura Capital, witnessed firsthand how many kids in Pakistan struggle to pay for a decent education while working at the Progressive Education Network (PEN). A nonprofit group called PEN provides youngsters who cannot afford an education with free, high-quality instruction.
Nadeem states, “Many kids in Pakistan complete high school, but the percentage of those who can pursue a higher college education drops off dramatically.” “With this drop, EduFi hopes to close the funding gap between high school graduation and admission to a first-year university.”
The two-year-old startup has now partnered with fifteen universities, making the app accessible to over 200,000 students in Pakistan who are required to pay for their undergraduate, graduate, and doctoral degrees.
EduFi requests the applicant’s financial situation (student or parent) when they apply for loans using the app. For instance, bank statements from the preceding 12 months or proof of income from a small business, freelance employment, or a salaried position that may sustain loan repayments. Upon approval of a student loan facility, EduFi transfers funds straight to the college’s bank account.
Singapore-Based Startup EduFi Raises Funding:
Singapore-Based Startup EduFi Raises Funding [Source of Image: Techcrunch.com]
EduFi tested its credit model against 80,000 consumer finance loans that banks had made during the final 18 months of its beta phase. According to the business, student loans can be disbursed quickly—within 48 hours of application—thanks to its credit rating algorithm.
The Securities and Exchange Commission of Pakistan (SECP) has approved EduFi’s application for a loan license; the license is anticipated to be given in November. According to Nadeem, the company is gathering input and data to enhance its offerings while validating its product and service with prospective clients.
According to the organization, they have revolutionized the conventional bank strategy, which entails exorbitant interest rates, a convoluted application procedure, and a minimum of three to four weeks for approval. Users can take advantage of customizable loan terms and conditions and a convenient, uncomplicated approach by using the EduFi digital lending app.
“Education can transform people’s lives and give them hope.” There are millions of people like me. In addition to providing this hope, EduFi will act as a catalyst for positive social change by relieving one of the most significant obstacles facing aspirational families, according to Nadeem. For instance, the $8,000 down payment required for dentistry or medical school is unaffordable for many people in Pakistan. Every student we have assisted is evidence of the ambition, opportunity, and empowerment that EduFi aspires to provide.
With the pre-seed funding, the business plans to grow its client base, enhance its platform, enter new markets, and introduce more fintech offerings, such as student credit cards.
“This represents a significant stride in promoting financial inclusion for low- and middle-income households. In Pakistan, nearly half of the income families earn is dedicated to their children’s education, a challenge exacerbated by inflationary pressures. Faisal Aftab, the General Partner and Founder of Zayn VC commented that EduFi’s innovative approach will ease this burden, enabling families to invest more confidently in their children’s future.”
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