StudentFinance, the fintech that redefines education financing raises £3.7M to grow in the UK

StudentFinance Image credits: StudentFinance

Madrid-based StudentFinance is an international fintech company connecting education with employment via Income Share Agreements (ISAs). In a recent development, the fintech raised $5.3 million (nearly £3.7 million) seed funding.

Investment details!

The investment round was led by Giant Ventures and Armilar Venture Partners. Existing investors Mustard Seed Maze and Seedcamp, along with Sabadell Venture Capital and a list of angel investors including Victoria van Lennep (founder of Lendable); Martin Villig (founder of Bolt); Ed Vaizey (the UK’s longest-serving Culture & Digital Economy Minister); Firestartr (UK-based early-stage VC); Serge Chiaramonte (UK fintech investor); and more, also participated in the round.

The funding will be used to expand into the UK and other European markets in 5 years. Also, the firm announced its plans to reach €500 million (nearly £430 million) of ISAs. Also, it will triple the size of its team, hiring specialists across product, data, engineering and design, operations, HR, finance and legal sectors.

Mariano Kostelec, co-founder & CEO of StudentFinance, said: “We are incredibly excited to have secured such high calibre investors and to have received the continued support of our existing investors, who all believe in our mission of removing barriers to education and empowering economic mobility. With StudentFinance, it takes an average of just four months for reskilled students to find more lucrative employment compared to the UK market average, where the majority of graduates only find employment up to 15 months on from completing their studies. The pandemic has only reinforced the need for solutions that enable people to access quality education to secure employment opportunities and we are making it a reality.”

Marta Palmeiro, co-founder & CFO of StudentFinance, added: “We are on a mission to democratise education and our ISAs are the ultimate solution for fair and affordable access to the skills people need to find employment in this ever-changing digital world. Our seed round of funding will help us to achieve our ambitious goals of partnering with 150 schools and securing €30m in ISAs by launching in the UK and two other countries. In five years we want to reach €500m worth of ISAs as we continue to develop our predictive model for skills demand.”

Cameron Mclain, Managing Partner of Giant Ventures, commented: “The form and funding of education needs to evolve for the modern world. Education should not leave students burdened with debt. What StudentFinance has built empowers any educational institution to offer ISAs as an alternative to upfront tuition or student loans, broadening access to education and opportunity.”

Duarte Mineiro, Partner at Armilar Venture Partners, commented: “StudentFinance is a great opportunity to invest in because aside from its very compelling core purpose, this is a sound business where its economics are backed by a solid proprietary software technology. StudentFinance will make a real impact on the life of students across the globe and help to broaden access to more formal technical training, bringing more innovation to the market and contributing to economic development. We couldn’t be more excited about the journey ahead.”

Sia Houchangnia, Partner at Seedcamp, commented: “The need for reskilling the workforce has never been as acute as it is today and we believe StudentFinance has an important role to play in tackling this societal challenge. When we first met Mariano, Marta, Sergio and Miguel, we were immediately impressed by their ambition and the team who have the perfect combination of operational, financial and technical expertise. We are delighted to see all the progress they’ve made since we first invested in their pre-seed round in 2019. In a short amount of time, they’ve built a strong team, a software layer that uniquely understands the job market and have already helped many students upskill, enabling them to significantly increase their income.”

UK expansion plans

StudentFinance announced that they would use the proceeds of the round to expand into the UK later this year. Here’s what the fintech revealed to UKTN in an interview.

Regarding when the company is planning to expand into the UK, the company replied, “StudentFinance is currently operating across multiple European markets, and we expect to open a UK office in the next 3-4 months, with plans to expand the team and provide localised services with our funding.”

Commenting on how did COVID-19 affect their business and how they deal with it, the company stated, “As a team, we became a 100% remote company as we could not use offices and meet in person. This turned out to be an advantage as we are now able to attract the best talent irrespective of location, and our team is now distributed across 6 countries. The pandemic moved both the education and employment market online (i.e. remote), and StudentFinance is enabling and facilitating that shift through a full cross-border model. This actually brings more opportunities for people who can now access reskilling and upskilling opportunities that lead to highly demanded jobs, without having to move to a different city.”

Surge in partners amidst pandemic

StudentFinance was founded in 2019 by Mariano Kostelec, Marta Palmeiro, Sergio Pereira and Miguel Santo Amaro. Cofounders Mariano Kostelec and Miguel Santo Amaro previously built Uniplaces into the largest student housing platform in Europe.

The fintech helps to plug the growing skills gap and democratise education simultaneously, by providing both the technology infrastructure for education providers to offer flexible payment plans in the form of ISAs and data intelligence on the employment market to predict job demand. In the first year, StudentFinance has partnered with over 35 education providers across several European countries, thereby increasing its partners by over 100x during the pandemic. The fintech firm is working with some established schools and upskilling platforms including Ironhack and Le Wagon.

Pay only when employed!

Due to the digital acceleration and changes in working habits caused by the pandemic, nine in 10 UK workers need to reskill by 2030. With the ISA model, students start paying back for their education only when they employed and earn above a minimum income threshold. The payments will be structured as a percentage of their earnings. This successful model centered on employment outcomes eradicates the risk faced by students.

Of StudentFinance’s cohort of students from January 2020, 17% are already in the repayment stage, having mastered the skills necessary to secure more lucrative employment, generating on average a 45% increase in income.

StudentFinance’s predictive models and technology infrastructure democratises access to education by creating an intelligence layer between talent, education, and employment while maximising employment outcomes. The company analyses real-time job market data down to the skill level, before selecting education programmes based on their alignment with job market demand and performance outcomes. In turn, students are assessed based on their future earning potential, and not past income or employment history.