MPower, a fin-tech startup which connects students to loans from investors without the need for a co-signer, has secured $6 million investment in its latest round. While the round was led by Zephyr Peacock, existing investors have also participated in the current round.
Existing investors who participated in this round include University Ventures, 1776 Ventures, Goal Structured Solutions, VilCap Investments and Fresco Capital. Zephyr Peacock will also help the company set up its base of operations in Bengaluru, India.
In lieu of this investment, the company is now planning to use the funds to enhance its technology platform and to further expand its outreach efforts in emerging markets.
Higher education is expensive in the U.S., especially for international students who don’t have access to federal student loans. This inspired Manu Smadja and Mike Davis to start MPower.
Commenting on the funding round, MPower CTO and Co-founder Mike Davis said,
Both our growth trajectory and the caliber of the members of our investor family speak to MPOWER’s unique ability to serve the unmet demand in student lending. Our investors share our vision as we work together to ensure high-potential students, regardless of nationality or socio-economic status, have the opportunity to achieve their true potential.
Abhijeet Kudva, Director, Zephyr Peacock India, said,
MPOWER is a pioneer in developing technology-driven lending solutions for international students in the U.S. Lack of financing options is a barrier for promising students seeking educational opportunities in some of the world’s most reputed universities, and MPOWER is seeking to eliminate these challenges. We are excited about our partnership with MPOWER Financing.
For MPower and investors who provide the loan money, the payoff comes from the loan interest, which can range from about 8 percent to about 14 percent. As it is not subsidized by the government, the rates are higher than the federal loans available to American citizens.
The students that receive loans are selected by an algorithm which calculates the likeliness to be able to pay back the loans, including the one-time 5 percent fee tacked onto the loan at the start. Payments are set to be minimal until graduation but increase after the graduation.
As per the company, Indian students availing loans through them do not need to furnish guarantees, co-signers, or collateral and can make only small touch payments until graduation. Students can pay for tuition and other services such as housing, meal plans or health insurance.