EduFi raises $6.1 million in pre-seed funding to make college more accessible

EduFi raises $6.1 million in pre-seed funding to make college more accessible

EduFi, an EdTech startup providing student loans, has raised $6.1 million in pre-seed funding from Zayn VC, Palm Drive Capital, Deem Ventures, Q Business, and various angel investors.

Make me care: Pakistan spends more than $14 billion yearly on students’ education because public schools are terrible. In addition, over half of Pakistan’s adult population doesn’t have a bank account or insurance.

It’s pretty standard for kids in Pakistan to make it to high school, but they don’t make it to college – due to financial reasons.

With adequate funding, EduFi believes the gap between high school graduation and first-year university entrance can be closed.

Tell me more: EduFi employs the Study-Now-Pay-Later model, which leverages an education sector-focused credit scoring system to evaluate loan applications based on students’ financial and educational backgrounds.

How it works: When a student (or a parent) applies for loans, EduFi requires the applicant’s (student or parent) financial status. 

For example, the previous 12 months’ bank statements or a source of income that can support their loan repayments, such as a salaried job, a small business, or freelance work. 

Once a student loan is approved, EduFi sends the money directly to the college’s bank.

Progress: EduFi has partnered with 15 universities, extending its services to around 200,000 students across Pakistan. The beta phase included testing its credit model against 80,000 consumer finance loans.

You should know: EduFi was founded in 2021 by Aleena Nadeem. 

EduFi’s $6.1 million pre-seed round is the largest pre-seed funding round disclosed by a Pakistani startup, beating KraveMart’s $6 million round in December 2021.

What they are saying: 

The absence of credit scoring has restricted credit access to a thin, top tier of customers. We want to expand the credit and student loan opportunity to a much wider audience of students across the country. Secondly, we feel student loans can be a bridge to the country’s two biggest problems – high levels of poverty and low literacy rates – and catalyze economic growth.

– Aleena Nadeem, Founder EduFi.

We are thrilled to support Aleena’s vision for EduFi, which aims to provide financing options for families to fund their children’s higher education. This is a significant step towards achieving financial inclusion for middle and low-income families.

– Faisal Aftab, General Partner & Founder at Zayn VC

What’s next: EduFi has received approval for a license to make loans from the Securities and Exchange Commission Pakistan (SECP). It is awaiting a non-banking financial company license to commence loan disbursement, with loans between PKR 300,000 and 1,000,000.

It plans to offer debt and equity loans, with an expected Annual Percentage Rate (APR) of around 30%.

Zoom out: EduFi plans to use the capital to expand its customer base, build its platform, and introduce additional fintech products, like student credit cards. 

Big Picture: With its innovative approach and recent funding, EduFi could be a game changer for education financing, especially in Pakistan, where traditional methods are ineffective or inaccessible.

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