Cameron Stevens, founder and CEO of Prodigy Finance was an INSEAD graduate who experienced difficulties financing an international MBA – his response was to start Prodigy Finance in the UK before he brought it back home to South Africa.
His international fintech platform that has developed the world’s first borderless credit model, just raised R3.19 billion or $242 million. This includes a R532 million Series C equity round led by venture capital firm Index Ventures, with participation from Balderton Capital and AlphaCode; and a R2.66 billion debt facility led by a global investment bank.
The company, which has 126 staff across offices in London, Cape Town, and New York, offers loans to postgraduate students accepted into business, engineering, law and public policy degrees at the world’s top universities, such as Harvard, Oxford, INSEAD and the University of Cape Town. Since it was established in 2007, the company has provided more than 7,100 students over R4.32 billion in funding. The business expects to lend to 20,000 customers by the end of 2018.
This fundraise marks the firm’s tenth anniversary, and will help the UK-headquartered company expand its operations and create highly skilled jobs in its subsidiary locations – Cape Town and New York offices.
Prodigy Finance’s unique global credit model assesses applicants based on projected earnings rather than historical credit, allowing the company to provide funding to students without collateral, a cosigner or guarantor. To date, more than 80 per cent of its borrowers have had no alternative access to financing. It also enables qualified investors, and the alumni of top schools, to help fund students from their alma mater or home country, while earning a financial return.
Stevens hails from Cape Town. He noticed that students from emerging markets were particularly disadvantaged in financing their education at leading universities, and that banks were unable to assist.
Stevens said: “We’re excited about this investment as it will help us double the size of our student portfolio. We saw a market failure in international lending and have spent the last decade rectifying this problem. Our business model and the schools we work with have also allowed us to build a talented team of experts, including our tech professionals and programmers in Cape Town. We believe in financial inclusion and talent mobility, and look forward to continuing to help international students break the funding barrier and further their education at a top school.”
Farai Mwamuka, a Zimbabwean who worked for a number of years in South Africa, needed funding for his 18-month MBA at London Business School, which costs almost R1.28 million in tuition fees alone. He cites the exchange rate as a major issue affecting his budget.
Mwamuka explains: “It’s tough to get financing especially for MBA courses of this magnitude. Prodigy Finance fills a gap that students from developing countries need.”
Dominique Collett, Head of AlphaCode, the fintech investment arm of Rand Merchant Investment Holdings, said: “Prodigy Finance has a truly differentiated business model solving a real customer need, and is powered by a talented team – it is one of the leading lights of international fintech.”
- With additional reporting by Prodigy Finance