Today on Fintech we are please to speak to Eela, Co-Founder of EduFund. EduFund is India’s first dedicated investment advisory app for higher education. With the help of its strategic partners and investors such as ViewTrade Holding Corp., the EduFund app gives parents an opportunity to build nest-eggs by investing in Indian markets and abroad.
Who are you and what’s your background?
My first foray into the world of fin-tech started with my first job at a quantitative hedge fund. Today, when we hear the word “fintech” it’s easy for our minds to think of day-trading apps or robo-advisors that cater to the mass market. But I started my career working for a commodities trading advisor (CTA), where 99% of trades were based off systems and algos. Technology was utilized in a sizable way, though I would only come to appreciate this much later when I started EduFund.
To back track: I completed undergrad from NYU. I dropped out of a master’s program at Columbia University due to financial constraints, which got me thinking of how to become more financially responsible and pay off my loans. Though I never formally studied finance in college, I was intrigued by financial markets and recognized how important it was for even a layperson to understand the basics of how to manage their money. Very serendipitously, I landed a role working in financial services where I received immense exposure to the world of trading and markets. I was lucky to have a team of colleagues who were great teachers. Yet at the same time I knew that I did not want to be a career financier for the rest of my life- there was something more.
This is when I decided to move to India, where instead of jumping right into work I decided to take a short sabbatical to decide my next move. It was during this time that I lived on an ashram, where I studied yoga and meditation. The curious relationship between yogic practices and finance is that both are based on the psychology of the mind. Yogic practices teach us observation, awareness, and stillness- all qualities that are necessary whilst making investment decisions but also qualities that can be forsaken in times of panic. I credit so much of my philosophy of how to run a team and company back to this time; a time where I learned how critical it is for decision makers to have clear minds and compassion.
When I realized that I was ready to go back to work I dove back into the world of financial services with an asset management company. This is when I met my current co-founder, Arindam. The seeds of EduFund were sown right then and there. We spent about two years studying the market and assessing the product market fit for EduFund, until in 2020 when we finally took the plunge and started building the app!
What is your job title and what are your general responsibilities?
As a founder the sky is the limit! Though no day is the same, I could be working on making product decisions, managing tech, reading over content, and helping on ops.
But my biggest responsibility is being the team cheerleading captain.
Can you give us an overview of your business?
We like to call EduFund India’s first 529. Though it comes with a few additional bells and whistles, the core product is focused around helping parents start a nest egg for their children. At present, our app is divided into four main areas:
1) Cost discovery: we have created a college calculator that helps parents and students understand the costs they will incur when they’re ready to go to college. Whether a child is 2 years old or 12 years old, we study certain metrics like education inflation, accommodation fees, and rupee devaluation to give a thorough estimate of the fees parents will incur when their child is ready to pursue their degree. Today, parents can choose from global universities across 15 countries and 6 specializations to get a very close estimates of cost.
2) Multi-asset investments: The EduFund app allows parents to invest in asset classes across Indian mutual funds, US equities, and digital gold. Once the cost discovery process is over, parents are prompted to start investing a monthly amount that will help them reach their goal quicker. Because every individual’s risk appetite varies, our robo-advisor suggests funds and asset classes to best suit their needs.
3) Loans: There may be a shortfall in funds that a parent has saved. Or a student may come to us and say that their parents never saved at all, and they need financial assistance. In those cases, the EduFund app helps these parents and students secure education loans.
4) Counselling: Financial preparedness is just half the journey. The other side of education planning involves academics. In cases where students need help with the admissions process, have questions around competitive exams, or simply need further guidance on what field to study the EduFund app provides access to academic counsellors to help clarify these doubts.
Tell us how you are funded.
EduFund is backed by both angel investors and one institutional player- ViewTrade Holding Corp. To date, we have raised a pre-seed round of $350,000 and are gearing up for our seed round this winter.
Why did you start the company? To solve what problems?
I went to university with some really rich people. Often times my commute to class consisted of gawking at my trendy classmates who wore Miu Miu flats, Michael Kors watches, and had the latest Blackberry (RIP) or iPhone. While NYU had a wide variety of students from all demographics and economic backgrounds, I still went to college with some really rich people. The epitome of this included “Oh, you didn’t know that Don Corleone had a jet?” We’ll call him Don Corleone for the sake of this piece.
Having grown up in a middle-class family in upstate New York, I was by no means poor. But having a parent who was sick and in and out of work for a decade meant being extra cognizant of money. It also meant my parents couldn’t afford to pay over $200K in tuition from their pockets.
Instead, I financed my higher education in a fragmented way by taking out loans and working two jobs. I was also incredibly lucky to receive a scholarship, and my parents were gracious to help me as much as they could. In other words, no Miu Miu flats for me.
Whether its $10K or $100K, at 18 years old it’s very hard to understand the implications of taking out a loan. Forget the concept of paying interest, at 18, it took me two months to understand the New York City subway system. We will thank my economics class for opening up my eyes to the wonderful concept of compounding interest on debts owed. Shortly after that class, it was as if a looming dark debt cloud emerged over my head. Though I had faith I would one day pay it off, the unknowns of when sincerely frightened me. To put this into context, my own parent paid of their education loans 5 years before I started university.
With a looming debt cloud over my head, I decided to start my masters at Columbia University. This time with no scholarship. It took me 4 months, and a full-time job offer to realize, that I didn’t want to pay over $100k more in loans. I thought I would be a pariah by dropping out of an Ivy League. But, to my surprise, my father told me to drop out, take the job, and pay off my loans. Shout out to my dad for being the best financial planner. Six years later, I was debt- free.
Cue EduFund. The EduFund journey began with self-reflection. Through our own struggles we recognized that finances should not be the biggest barrier in a child’s higher education. Equally important, it began as an ode to our parents for helping us as much as they could while wondering if they could have done more.
Today, the EduFund app that allows parents to create and start SIPs for their children’s higher education. But to reduce its identity to one line seems unfair. The EduFund college calculator (in the app) was built looking at each and every metric that a parent and child must consider for the education journey; metrics that we experienced not too long ago. Even if you don’t invest through us, here are a few things to consider:
Whether your child chooses to study in India or abroad, university inflation is a real thing. I still remember the day I received my tuition fee packet. My father was shocked that he paid half the cost of my tuition 20 years ago. But this is the reality of education today. No matter what you study, or where, university inflation is increasing at an astounding rate. Even in a COVID year, many universities have refused to reduce tuition fees for online/remote learning. If you’re planning for your child’s education 10 years from today, you may want to consider this because we certainly do. Oh, and that’s just university inflation. As your non-official economics professor, we’d like to tell you that country inflation will impact factors such as cost of living, especially if you want to send your kid abroad.
We ❤ India, and we are super bullish on the future of education here. But we know many parents still aspire to send their children abroad. On top of the existing steps for foreign education (funding, exams, essays, counseling etc), earning in rupees poses a challenge. With the rupee depreciation against major foreign currencies, earning in rupees and spending in dollars is a factor parents should weigh. A parent may want to consider investing abroad, if they’re ultimately going to send their kid to Kings College. The EduFund app helps you weigh this and allows you to invest in US dollar ETFS.
Please don’t wait until your child is 17 to start saving for their education. Small amounts today, can go a long way tomorrow. Create a plan for child and do it regularly. Just how the power of compounding impacts debts owed, it can also impact investments made over time. Every little amount has the power to reduce the amount of that looming debt cloud.
Education is expensive:
I am sure many fathers before and after mine faced the same moment of shock receiving their child’s tuition bill. While creating EduFund, we sat down with over 500 Indian parents, and were surprised to see that no one knew that the cost of top Indian B-schools exceeded 20 Lakhs INR.
This is just the reality. Please don’t wait for tomorrow! So today, while EduFund gets categorized as a “fintech app” it is also so much more. EduFund is a family; a family of people working to make the higher education journey transparent, and realistic. And most importantly: it is a token of appreciation to our parents, a humble effort to help all the parents that will come after ours and sincere wish to help the students we once were.
Who are your target customers? What’s your revenue model?
Our target customers are parents and expecting parents. Our philosophy is, the sooner you start investing for your child’s future the longer runway you have to watch that investment grow. Our youngest customer is a 7-month-old child, whose parent invests on behalf of them each month J Still, if you’re a parent with older children it’s never too late to start. Something is better than nothing, and your child will thank you for any contribution. At the heart of our revenue model is a sincere interest to help parents and students. We don’t want to add to the already bourgeoning fees they will have to pay for college. For our robo-advisory model we charge a flat annual fee.
Our customers also extend to young students who are looking to study abroad. These are students who need help with securing loans or with academic coaching to get ready for the journey oversees. Fees vary per service, but again the idea is to help students get access to these resources in an affordable way.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
In India, I’d love for the KYC processes to adapt to technology in a more robust manner.
What is your message for the larger players in the Finance industry?
Fintech is the future and banks should be quick not to get left behind.
What phone are you carrying and why?
iPhone- clean and user-friendly UI/UX
Where do you get your industry news from?
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Saira Rahman: @sairarahman
Radhika Gupta (CEO of Edelweiss): @iRadhikaGupta
What’s the best FinTech product or service you’ve seen recently?
PhonePe– I think it’s remarkable how for a country like India even the smallest shop vendors have a QR code for payments. Talk about democratizing finance.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
In the next two decades, I think wealth-tech in India is going to explode. Today, India mirrors where the United States was in the 1980s in terms of mass market allocations across liquid assets. With the advent of technology, access to investing has become more ubiquitous, which was not the case in America back then. With so many new fintechs in the wealth management space popping up, more financial literacy, and the sheer size of the population I think the future of fintech (globally) is really in India.