Education loans firm Shiksha gets funding from Michael & Susan Dell Foundation, Aspada

Chennai-based school financing company Shiksha Financial Services India Pvt. Ltd has received about Rs 6.7 crore ($1 million) from The Michael & Susan Dell Foundation along with  Aspada Investment Company, said a statement.

Shiksha Finance provides loans in the range of Rs 0.5 to 10 million (Rs 5 lakh to 1 crore) to affordable private schools, which use the loans for education infrastructure development.  Apart from loans to schools, Shiksha Finance also provides loans to middle and lower-income families to finance school fees of their children. The loans, secured through social collateral, can be paid back through a repayment schedule. 

Shiksha will use this round of funding to further strengthen its technology backbone, launch more products and expand into newer markets. This investment will enable the organisation to provide loans to 2,300 schools over the next three years.

V L Ramakrishnan, director and chief executive officer, said, “While education loans for higher education is quite common in India, Shiksha is addressing the vacuum in school financing through an innovative go-to-market solution.”

Incorporated in 2014, Shiksha Finance provides loans targeted at education entrepreneurs who seek to improve access to quality education. Shiksha is currently present in 3 states with 200+ loans to educational institutions till date.

Prachi Windlass, education director, India, Michael & Susan Dell Foundation, said, “The recent investment in Shiksha supports the foundation’s belief that a market-based, scalable financing sector can contribute to improving access to high-quality education for students who are at the bottom of the pyramid.”

Tom Hyland, co-founder & partner, Aspada, said, “Operating in a sector which has insufficient formal financing available, Shiksha has a tremendous opportunity to catalyze infrastructure upgradation and capacity increase necessary for schools to meet the demand for a good quality, yet affordable, private education in India.”

Since 2006, US-based Michael & Susan Dell Foundation has invested more than Rs 983 crore in non-profits and social enterprises in India, to companies that operates in education, family economic stability and health. 

The Aspada Investment Company is a holding company and venture capital investor with a significant commitment from the Soros Economic Development Fund (SEDF). In India, the firm has investments across agricultural supply chains, logistics, financial services, education, and healthcare. Aspada also manages the portfolio of the SONG Fund, an early stage venture capital firm backed by the Soros Economic Development Fund, Omidyar Network, and Google.

There are very few NBFCs that are exclusively focused on lending to the educational space. Besides Shiksha, other players in the same segment are Delhi-based Indian School Finance Company Pvt Ltd (ISFC) and Bangalore-based Thirumeni Finance Pvt Ltd, both provide loans to affordable private schools. 

While ISFC caters to private unaided schools, vocational colleges, coaching and tuition centres, Shiksha provides loans for asset creation, working capital and school fees in the education sector and Varthana provides loans to affordable private schools that cater to the poor and the emerging middle class.

In September, ISFC raised Rs 10 crore ($1.5 million) in funding from US-based impact investment firm Gray Matters Capital and its associate fund GrayGhost Ventures.

In April, Thirumeni, which operates under the brand name Varthana, raised Rs 92.6 crore ($13.94 million) from Kaizen Private Equity and SME-focused private equity firm Zephyr Peacock have come in as new investors. Kaizen put in Rs 28 crore while Zephyr Peacock committed around Rs 20 crore. Some existing investors put in the remaining amount.

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