StudentFinance: democratising education by connecting payments to income

StudentFinance is on a mission to democratise education and its Income Share Agreements (ISAs) are the ultimate solution for fair and affordable access to the skills people need to find employment in this ever-changing digital world. The latest seed round of funding, co-led by Armilar Venture Partners and Giant Ventures, will help to achieve their ambitious goals of partnering with 150 schools and securing €30 million in ISAs by launching in the UK and two other countries.

Founded in the beginning of 2020, StudentFinance is helping to plug the growing skills gap and democratise education simultaneously. How is it doing this? By providing both the technology infrastructure for education providers to offer flexible payment plans in the form of ISAs and the data intelligence on the employment market to predict job demand. In its first year of operation, the startup has partnered with more than 35 education providers across several European countries, managing over €5 million worth of ISAs, growing this figure more than 100x during the pandemic.

With an ISA, students only start paying back their funded tuition once they are employed and earning above a minimum income threshold, with payments structured as a percentage of their earnings. Being a success-based model, centred on employment outcomes and with no interest to accumulate, the risk is shifted away from the students. These ISAs are one of the first success-based models that connect payments to income, aligning all parties’ interests towards securing employment opportunities for users. 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.

Today, companies require skills that universities did not teach 20, 10 or even just 5 years ago and, for the majority, still don’t teach today. According to the World Economic Forum, 133 million jobs will be created in the next few years, mainly in technology and digital areas, while at the same time 75 million jobs will literally disappear.

The company is working with several established schools and upskilling platforms, such as Ironhack and Le Wagon, that support people to learn in a few months specific skills that companies are looking for. As the job market is shifting, people will need to constantly learn new skills to stay “up to date”. This means they will need to attend more and more of these shorter programs or online courses throughout their working lives, and really embrace the concept of lifelong learning. This is today a reality and a must. Today’s economy demands a completely different approach to education — one that is a lot more fluid and integrated with the advances in technology and with companies that are looking to hire new talent or even “reskill” the existing talent.

In Europe alone, there is a “gap” of 750.000 software engineers, and globally there is a shortage of 3 million cybersecurity experts. This means that companies have those jobs open and are “desperately” looking for this talent, but they cannot find it.

“With StudentFinance, it takes an average of just four months for reskilled students to find more lucrative employment compared to the 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,” comments Mariano Kostelec, co-founder & CEO.

What does the future hold?

In five years, StudentFinance wants to reach €500 million worth of ISAs as they continue to develop their predictive model for skills demand.

The team will use the recent funding to triple its size, hiring specialists in product, data, engineering, and design, as well as in operations, HR, finance, and legal. StudentFinance’s augmented team plans to launch in the UK and other European markets in the coming months.