India and China are often the world’s leading exporters for many products. And both like to tout it too. But there’s one export category that both don’t talk much about viz students. That’s right.
In 2021 India “exported” over half a million students to countries around the world (that number halved in 2020 on account of the pandemic). Only China exported more students globally. Collectively, this lucrative cohort of students and their families spends an estimated INR 50,000 crore (roughly $6.7 billion) every year. I’m talking about just Indian students.
After graduating, most students hope to land a job in the countries they study in. Those that do often end up with salaries and lifestyles that are vastly different from what they might have enjoyed in India. But to get there, they must spend a lot of money. Money that they or their parents often don’t have. Money that must be borrowed.
There are a large number of players who play in this space. Small and big. Banks and non-banks. Family owned businesses and multinationals. Loan rates vary, as do defaults. Students in smaller towns don’t have access to the same quality of information as their peers in larger cities. This is an ideal market to disrupt at Large. Undifferentiated. Cash flow rich. Data poor. That’s why Sequoia, Harvard Management Company & Jungle Ventures have invested over $77.5 million in Leap Finance, a two-year-old startup that offers unsecured loans to students leaving India to study abroad.
But is it really so easy to disrupt this sector? Is there a natural ceiling to how many students will leave India each year, and of those, how many want loans? Can the same company offer advice and loans without conflicts??
