EDAID, the peer-to-peer lending platform that enables students to crowdfund their loans, is looking for its first external investment to support its expansion into the US.
The social enterprise, which offers students the opportunity to obtain interest-free, inflation-linked loans, is targeting US investors with technology scale-up expertise who can help the platform gain a foothold in that market.
“We’re planning to expand into the US early next year and will look to raise $5-10m (£3.8-7.7m) in external capital,” founder Tom Woolf told Peer-to-Peer Finance News.
“The most important thing is that the investors are the right fit. I think US companies would probably be better – from Silicon Valley or New York – as they will have the right knowledge and experience.”
The UK’s student funding market is valued at £40bn a year, but in the US it is $150bn, with students holding a whopping $1.4trn of debt.
Woolf said that the US was “a natural progression” for the company and that it would initially focus on obtaining regulatory authorisation in California and New York. It will be setting up a US marketing office but the technology team will still be based in London.
“We want licences in California and New York by the third quarter of 2017,” he said.
EdAid is also planning to launch a “social impact bond” to raise money from investors who want to add a socially-conscious investment to their portfolios. Woolf said that he had already been in talks with various pension funds and investment banks about the bond, which he hopes to launch in the middle of next year.
The company will issue a £10m bond initially and increase that to £100m over the next three years, Woolf said.
EdAid officially launched two years ago, but Woolf said that the first 18 months of the business were focused on getting regulated by the Financial Conduct Authority and that it is in the last six months that “the business started in earnest”.
The platform also helps students finesse their CVs and allows companies to advertise job vacancies. It currently has 2,500 students registered on its site, of which 500 are actively looking for funding or work.
“It’s an ecosystem,” said Woolf. “The idea is that students will use the platform to finance their loan and find a job, then will fund the next generation of student loans.”