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A crowdfunding platform helping MBA students from Africa and Asia to attend top US and European business schools has raised £100m from a group of institutions and entrepreneurs, including Betfair co-founder Ed Wray.
Prodigy Finance was co-founded by three Insead business school graduates, led by South African-born chief executive Cameron Stevens, after discovering that many classmates had been refused bank finance despite their higher than average future earnings potential.
The average salary for an MBA graduate from Harvard Business School is $180,000 three years after graduation, according to FT rankings data. But overseas students often struggle to persuade banks to lend them the money to pay the six-figure course fees because they lack a US credit record.
Three quarters of Prodigy’s borrowers come from developing world countries, including about a third from Brazil, Russia, India and China, many of whom find jobs in their home countries after graduation, making them extremely low risk, according to Mr Stevens.
“We don’t care if you move from Shanghai, Dubai or New York because it is a global market,” he said. “In the past, someone coming from China to study in London would have to stay in the UK to find work. Now they can return to work for Google in Shanghai.”
Prodigy has processed more than $130m of loans for about 2,000 MBA students in 92 countries since it launched eight years ago and boasts repayment rates in excess of 99 per cent.
A big attraction of MBA graduates is their higher future earnings potential, according to Mr Stevens, who predicts that Prodigy will be processing $1bn of loans a year by 2017.
The problem for overseas MBA students getting funding also hits Americans wishing to study at London Business School or Europeans with a place at the University of Pennsylvania’s prestigious Wharton School, Mr Stevens adds. “We are a global social enterprise,” he said.
Prodigy’s marketplace operates through a listed bond programme, in which lenders buy a stake in a package of debt supporting a group of students from a recognised business school rather than offering credit to individuals.
Many of those lending money are MBA alumni themselves and 60 of the world’s 100 top business schools are partners on the platform.
Loans for course fees are possible through other crowdfunding platforms, such as US-based CommonBond and SoFi, although neither of these specialise in the business school market.
Prodigy’s new financing, consisting of £12.5m of equity investment from Balderton Capital, a technology venture capital company, and various angel investors plus £87.5m in loan capital from Credit Suisse, will fund staffing increases and boost lending capacity.
Tim Bunting, a partner at Balderton Capital, who along with Mr Wray are taking a seat on the Prodigy board, said: “Cameron and his team have created a global execution platform that gives investors the opportunity to fund international students in a meritocratic fashion that positively challenges the status quo. This is a huge win for the students.”