US financial body gives $15M loan to Indian startup for quality education
An American financial organisation has agreed to sanction $15 million loan to an Indian education startup to expand the access to quality education by providing critical financing to schools that serve low-income students in India.
The financing will help Bengaluru-based Varthana to reach more schools by meeting its need for long-term capital that is unavailable in the Indian market, US International Development Finance Corporation (DFC) said in a statement.
The DFC, America's Development Bank, said that the financing will be especially critical as schools work to adapt to and recover from disruptions caused by the coronavirus pandemic.
In addition to providing timely loans, Varthana has been helping schools implement digital learning tools and teaching methods so that students can continue their education remotely through the pandemic, it said.
Set up by Brajesh Mishra and Steve Hardgrave in 2013, Varthana supports more than 3,500 schools with 84,000 teachers and 2.5 million students, particularly among low-income populations across the country.
The company utilises a unique cash-flow underwriting model that enables it to flexibly and sustainably provide loans to low-fee schools. The typical Varthana borrower operates a school that charges $5 to $25 per month in fees.
India's economy has grown rapidly over the last several decades, but more investment in education will be required to keep pace with this growth and extend its benefits across a broader segment of the Indian society, the DFC said.
Low-fee private schools have stepped in to provide low- and middle-income families access to quality, affordable education.
However, these schools need better access to financing in order to grow and improve, it said.
DFC CEO Adam Boehler said this will help low-income students in India access quality education so they can learn, thrive and give back to their communities.
Varthana is a testament to the impact that early-stage ventures can deliver when given the opportunity to scale their innovative approaches, he said.
As a specialised lender to affordable private schools, Varthana is well positioned to provide both capital and remote education solutions to help schools navigate the current challenges.
DFC's willingness to provide funding in the midst of this crisis truly demonstrates their commitment to support the education sector when it needs the most, and for that we are very grateful, said Varthana CEO Hardgrave.