In the state of Maharashtra in India, Ishaan studied in a Government school through Grade 10 and had barely passed his school exams. While he was not strong in academics, he was a strong athlete, with a keen interest in football and cricket. When he received his low Grade 10 results, and saw his friends enrolling in junior colleges, he wondered what he should do next. His older friends enrolled in Tier 3 Junior Colleges, paid college fees, but barely passed their Grade 12 exams, and were not able to find jobs. Both of Ishaan’s parents worked full-time and didn’t make enough money to support the household. They needed an additional income. Ishaan couldn’t afford to take a chance at college.
Desperate to support his family’s income, he began working at a small gym near his home as an assistant. He learned that trainers at the gym earned Rs. 20,000 a month and found out about K11 Academy, which provides a certification course for personal trainers. However, the three-month course cost Rs. 75,000 – more than Ishaan could afford, even if he borrowed from friends and family.
Ishaan talked with K11 Academy about his inability to pay the fee upfront, and they told him about Eduvanz, a non-banking financial company that offers low-cost loans for skills training and education. The counsellor at K11 Academy explained that Eduvanz allowed Ishaan to pay the fee in instalments over a 12-month period. With the help of the counsellor, Ishaan applied for the Eduvanz loan online, submitted a few documents, and with his father acting as co-borrower, obtained a loan from Eduvanz within three days.
Eduvanz, enabled by its technology platform and a strong diligence of training institutions, can offer credit where few other financial institutions provide loans. In January 2019, the Michael & Susan Dell Foundation committed a $1 million loan to Eduvanz specifically to enable low-income youth to enroll in high-quality training courses by bridging the affordability and upfront fee payment gaps.
These courses, offered by institutes such as Times Pro, K11 Academy, Imarticus, and others provide youth the opportunity to access aspirational jobs in various industries, including banking, analytics, fitness, and healthcare – industries which have traditionally only been accessible to youth from middle and high-income families.
Founded in 2016, Eduvanz has disbursed more than Rs.150 million in loans to date and has a strong network of more than 120 partner institutions, several of which use Eduvanz as their sole lending partner. The Eduvanz team brings more than 60 years of experience across banking and financial services, credit, technology, and marketing to inform decision-making in loan provision and partnerships with institutions. In December 2018, Eduvanz raised a seed funding round from Unitus Ventures to propel its next round of growth.
At the foundation, we believe we can catalyze a market for funders to finance skill development in India’s youth by supporting players like Eduvanz, which bridge an important gap for low-income youth, and provide an avenue to aspirational jobs. This work is similar to our efforts to catalyze the urban microfinance market in India, where we supported early stage organizations such as Ujjivan, Swadhaar, Janalakshmi, and Arohan to prove that there is a viable business model to improve microfinance penetration in urban areas.
The challenge? There are still open questions around awareness levels of low-income youth about skill development courses, the gaps that exist in the value chain connecting youth to high-quality courses, and the institutes’ experiences and challenges in offering courses to an increasing population. To answer those questions, we are conducting primary market research, which, along with early results from Eduvanz’s experience of lending to this segment, will help chart the strategy and way forward in catalyzing this market.
In the meantime, we are reflecting on what works: In Ishaan’s case, he is now working as a personal trainer, making Rs. 22,000 a month. Nobody had ever offered a formal loan to Ishaan or to anyone in his family, and now his younger siblings are taking advantage of the opportunities Eduvanz offers to change the trajectory of their financial future.