Bangalore based Varthana, a company which provides loans to support private schooling for children of the poor and emerging middle class, has raised funds from Boston headquartered Accion Venture Lab.
Venture Lab, which is Accion’s $10 mn seed fund, did not disclose the exact amount of investment but said that typically an investment ranges from $100,000- $500,000 in convertible debt or equity.
The Bangalore based Non Banking Financial Company was founded by Steve Hardgrave, an entrepreneur with experience in international development and investment and Brajesh Mishra, a former retail banking executive.
With over 400 million student aged population out of which only 260 million enrolled in schools, there is a need for local entrepreneurs to set up private schools and relieve the pressure from the Government infrastructure.
According to Varthana, dedicated school owners, often, former teachers or husband and wife teams, have launched and managed local schools using their own resources and are able to generate 20% -30% margins at price points that low-income families can afford. “This segment, which includes more than 200,000 schools and 80 million students, grows bigger every day,” says the NBFC which helps to bridge the financing gap in the space.
Venture Lab also invested in four other financial inclusion startups.
Singapore headquartered Coda Payments, a transaction procession platform, Hong Kong based Demyst.Data, a big data firm, PayClip, a payments company and Salud Facil, a Mexican company have raised funds from Venture Lab.
Accion is a not for profit organization which works in the financial inclusion space.