Education loan startups have seen a sharp increase in their use case especially during the Covid impacted fiscal year (FY21). While their scale exploded in the last fiscal with a steep rise in expenses, some managed growth with sound economics.
One such startup is Mumbai-based Eduvanz.
Eduvanz, which provides loans for skill development to students, has recorded a 203% surge in its operating revenue to Rs 13.63 crore in FY21 from Rs 4.5 crore in the preceding financial year, regulatory filings show.
The majority of this income came from discounts earned and commissions at Rs 5.45 crore and Rs 4.52 crore respectively. The startup also collected Rs 2.01 crore and Rs 1.48 crore respectively from processing fees and interest on loan disbursal.
Eduvanz provides loans to students to finance their school, coaching and test prep fees. Salaried and self-employed individuals can also seek loans from it to fund their up-skilling expenses.
The spurt in the company’s scale during FY21 did come with a rise in costs though. Eduvanz’s total expenses increased by 94% to Rs 24.82 crore in FY21 from Rs 12.82 crore in the last fiscal year. Employee benefit expenses contributed 50% of the total expenditure. This cost surged 82% to Rs 12.5 crore in FY21 from Rs 6.88 crore in FY20.
Finance cost also increased 237% to Rs 5.93 crore in FY21 as compared to Rs 1.76 crore in FY20. Further, the company’s legal and professional fees increased by 40% to Rs 1.36 crore in FY21 from 0.97 crore in the previous fiscal.
During the period, Eduvanz recorded a slight rise in its losses which increased by 29% to Rs 10.44 crore in F21 from Rs 8.11 crore in FY20. On a unit level, the company spent Rs 1.82 to earn a single unit of operating revenue.
Cash outflows for the startup were recorded at Rs 11.92 crore in FY21 from Rs 25.96 crore in the preceding financial year.
Backed by the likes of Sequoia, InCred Financial Services, Vivriti Capital, and Northern Arc Capital, the company claims to have disbursed around Rs 400 crore in loans across categories including upskilling and school fee financing.
Eduvanz has raised over $30 million to date across equity and debt rounds. Importantly, 50% of the total proceeds was raised by the company in FY21. According to Fintrackr’s estimates, Eduvanz was valued at around $70 million during the Series B round in August this year.
Eduvanz competes with the likes of Mpower Financing, Credenc (spelling check) and Propelld.