StudentFinance books €4.5m in seed round with the aim to reshape education financing

UK-headquartered education-focused FinTech StudentFinance raised €4.5m in a seed round co-led by Giant Ventures and Armilar Venture Partners.

Existing investors Mustard Seed Maze, Seedcamp and Sabadell Venture Capital also participated along with a number of notable angel investors including Victoria van Lennep, founder of Lendable, Martin Villig, founder of Bolt, Ed Vaizey, former Culture & Digital Economy Minister UK, Firestartr, a UK-based early-stage VC syndicate and Serge Chiaramonte.

With the funding, StudentFinance intends to triple the team size across the board by hiring specialists in product, data, engineering and design, as well as operations, HR, finance and legal as well as launch its product in additional European markets in the coming months.

Founded in 2019 by Mariano Kostelec, Marta Palmeiro, Sergio Pereira and Miguel Santo Amaro, StudentFinance seeks to democratise education with employment through Income Share Agreements (ISA). The company is building the data and technology layer to enable education providers – ranging from boot camps to certificate providers to Masters degrees – to offer ISAs as an income-based deferred payment option to their users.

A student is only liable to begin repayments for education once they are gainfully employed and earning above a minimum threshold. The payments are then structured as a percentage of their earnings. As an added bonus, there are no interest fees accrued with an ISA.

Today, the company operates across several countries in Europe including Spain, Germany, and Finland. StudentFinance already works with some established schools and upskilling platforms including Ironhack and Le Wagon and has partnerships with more than 35 education providers whilst managing over €5m in ISAs.

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.

Commenting on the round, Kostelec said, “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.”

Building on the importance of ISAs, Palmeiro 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.”

The investors are indeed bullish about the firm’s growth. Giant Ventures managing partner Cameron Mclain noted that, “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.”

Echoing a similar sentiment, partner at Armilar Ventures Duarte Mineiro 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.”

Seedcamp partner Sia Houchangnia added, “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.”

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