The Challenges Faced by Indian Students Studying Abroad

Each year, a significant number of Indian students – numbering in the hundreds of thousands – embark on journeys to foreign countries to further their education. Upon arrival, these students frequently encounter a variety of obstacles. A prominent issue is the lack of a local credit history, hindering their access to essential financial services.

Financial institutions often perceive a heightened risk when dealing with international students, resulting in increased fees and less favorable terms. For example, an Indian student pursuing studies in the United States may face an interest rate exceeding 13% on loans, while domestic students can often secure comparable credit at less than half that rate.

Leap Finance: A Solution for International Students

Leap Finance, a startup established two years ago with offices in San Francisco and Bangalore, is dedicated to addressing this problem and others faced by students. The company provides loans to students at competitive interest rates by assessing data generated within India – both traditional and alternative sources.

Since its initial coverage, Leap Finance has broadened its services to encompass several additional student needs, as explained by co-founder Arnav Kumar in a recent interview.

Currently, Leap assists students with guidance regarding applications, visa processes, and test preparation. Furthermore, Leap has cultivated a social network comprising over half a million students, facilitating peer-to-peer support and access to the platform’s various services for international college admissions.

The need for peer guidance is substantial; approximately ten years ago, many prospective engineering students sought advice from current students at their target institutions. In fact, over a million Indian students annually engage in similar networking before beginning their college journey.

Arnav Kumar, formerly an associate VP at Elevation Capital, notes that Leap’s community replicates this established offline behavior. While some students utilize platforms like LinkedIn or Facebook, Leap aims to become the primary community resource for those seeking higher education abroad, with its pages optimized for Google search visibility.

A Significant Market Opportunity

The potential for startups to improve solutions for these challenges is considerable.

“India represents the second-largest global market for international student enrollment, with an increase of 8 million enrollments in higher education over the past decade. This creates a substantial opportunity within a fragmented landscape,” stated Amit Anand, founding partner of Jungle Ventures.

Vaibhav Singh, Leap’s other co-founder, highlighted that Indian students apply to over 5,000 schools and universities internationally each year, pursuing tens of thousands of different courses.

“The range of choices is extensive, and students require expert guidance to make informed decisions – arguably the most important decision for them and their families,” he added.

Leap Finance Secures Series B Funding

Recognizing this opportunity, investors are actively supporting Leap. The startup announced on Tuesday a $17 million Series B funding round, led by Jungle Ventures, with participation from Sequoia Capital India and Owl Ventures. To date, Leap has raised a total of $22.5 million.

The global pandemic initially hindered international travel for many Indian students. However, it is estimated that over 700,000 students will leave India this year to pursue higher education. Leap’s co-founders aim to assist 150,000 of these students.

Leap intends to utilize the new funding to expand its technology team and broaden its geographic reach, currently supporting students applying to colleges in the U.S., Canada, the U.K., and Australia. Singh also mentioned plans to recruit additional tech and business professionals.

“Despite the challenges posed by COVID-related travel restrictions in 2020, we were impressed by the Leap team’s resilience. They not only provided financing solutions to hundreds of students but also expanded their services with Leap Scholar, offering counseling to thousands of Indian students seeking overseas study. This integrated approach has strengthened Leap’s competitive advantages,” commented Ashish Agrawal, principal at Sequoia India, who made an early investment in Leap before the product’s launch.

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