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Where does Prodigy Finance secure its funding?

Ricardo Fernandez - June 09, 2017

Where does Prodigy Finance secure its funding?

Prodigy Finance is a community lender, and as such our sources of funding vary. But before we talk about all the different sources of finance it’s important to understand the history of Prodigy Finance.

How did Prodigy Finance begin as a fintech student loan provider?

When Cameron Stevens, CEO of Prodigy Finance, founded the company in 2007, they aimed to be the connection point between banks and students and provide a credit model so banks could lend exclusively to international students attending the top universities.

They developed a risk assessment algorithm and legal model to offer borderless loans in a competitive way. Unfortunately, the banking crisis hit the following year, and banks and institutional investors chose only to pursue traditional investments at this time.

Funding student loans through schools and alumni

Cameron Stevens needed another source of funding for his company and reached out to his own MBA alumni community at INSEAD for the funds. To make it easy to accept investments, Prodigy Finance created a regulated bond structure, listed on the Irish Stock Exchange, so any qualified investor or institution could invest in students.

Ten years later, the company’s most important funding sources continue to grow through alumni and institutional investors.

What sources of funding does Prodigy Finance use for its loans?

Prodigy Finance has six different funding sources:

1. Alumni funding

Alumni from top universities invest in specific bonds for their school or regions and receive a competitive return to support a pool of students.

2. University investments

Universities have been investing in their own students from the start. This shows a true commitment to their students and programme.

3. Retail investors

Since 2009, individual qualified investors from around the world can invest a minimum of $10,000, £10,000 or €10,000 in one of the many global, regional or school-specific bonds issued by Prodigy Finance. These retail investors receive a financial and social return on their investments.

4. Family offices and impact investors

These investors typically invest a minimum of $1 million in several bonds supporting students. They have an opportunity to invest by affinity, with school-specific listed bonds such as INSEAD and LBS, a global multi-school bond, or regional focus (Latin American or India). These investments have a social impact focus, and some investors have developed scholarship programmes using the return generated by their investments.

5. Credit Suisse and private banking

Prodigy Finance continued its growth in 2014 by jointly issuing “education bonds” with Credit Suisse. These bonds were sold to High Net Worth Individuals by Credit Suisse to grow our sources of funding for students further.

6. Deutsche Bank and similar institutions

In 2015, the company obtained the first institutional financing to continue growing and lending to students. This investment from Deutsche Bank finally completed the company’s original goal of becoming a connection point between students and banks.

This funding demonstrates the trust that banks and institutions put in our lending model and company as well as providing institutions with an avenue to develop talent and support education.

Having started with loans for international students pursuing MBAs at top European schools, the company has expanded to include more programmes at an increasing number of institutions. Students pursuing business, engineering, law, and public policy masters degrees at top universities across the globe. From on-campus events to post-grad networking opportunities, the community motivation is present in everything Prodigy Finance undertakes, which is and has always been more than loans.

Prodigy Finance remains a community funder even as it stretches to develop new sources of financing. And, the company, under the leadership of Cameron Stevens, aims to provide loans to more international students. The Prodigy Finance loans extended to more than 6,800 students is only the start of the story.

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