These McKinsey & Co alumni make paying tuition easier for parents
While working on nexquare, a socially-minded edtech startup that harnessed data science in education to create technology and data products, Raman Thiagarajan and Haseeb Ahmed realized that during the pandemic, many of their clients were facing challenges around collections and receivables, i.e. collecting the debt owed.
“During the pandemic, we talked with several institutions, banks, credit providers and other players, and we realized that there was a problem. Although there are several payment gateways and banks in the market , their offers were generic and did not solve the main problems of the institution,” adds Raman.
To solve this problem, the colleagues from McKinsey and Company launched their second company ––in June 2021. With headquarters in Dubai, the startup is registered in Kochi, India, with offices in Bangaluru, Kochi and Delhi for the time being.
What does it solve for
zenda aims to solve two major challenges facing parents and institutions.
First of all, payment of school fees (including nurseries, K-12s, colleges, coaching/training centers, higher education, etc.) are mostly done offline, and even in institutes that allow digital payments, the process is cumbersome and expensive.
Second, the majority of families receive monthly incomes, however, many schools levy tuition fees at the beginning of the term or every two years, resulting in cash flow stress for parents and collection delays for schools.
When interacting with Your story, Raman, CEO and co-founder of zenda, says, “We hear many stories from parents about the stress they go through when, at times, they don’t have funds available to meet due dates/deadlines, and access to help with credit is still old-fashioned and expensive. Regardless of economic strata and culture, every parent is obsessed with the future of their child(ren).
zenda allows families to keep track of their dues and make payments with a host of pay-it-now and pay-later options, and unlock rewards for paying on time.
The fintech start-up’s flagship product is an app for parents. Parents can use the app to make full fee payment (via multiple digital payment methods, from cards to UPI and bank transfers) or they can pay it in installments (pay later).
Under the pay later option, institutes receive the money upfront and the app allows parents to pay it in convenient installments.
Speaking of the platform, Raman explains, “Zenda has partnered with different credit providers and gives parents an integrated financial experience once they’re on the app. Accessing the loan is a seamless three-step process, and within five minutes (in most cases) the credit would be disbursed and the school will receive the money.
zenda integrates with schools through its proprietary data model and APIs (application programming interface), and eliminates last-mile reconciliation issues and delays.
With a team of over 40 members, two-thirds of whom are in India, the startup has grown rapidly, operating from Bangalore, Kochi, Delhi and Dubai.
Raman has over 20 years of experience and was a partner at McKinsey and Company, where he led the firm’s financial services practice in the MENA (Middle East and North Africa) region. He has been actively involved in the startup ecosystem for over 10 years and has been an entrepreneur for over 5 years.
Haseeb was a senior partner at McKinsey and Company and worked actively in the areas of analytics/decision science, serving clients around the world.
zenda is the second startup from the founders. Raman mentioned that their previous business operated profitably and its solutions were actively used in more than 10 countries.
Market size and traction
With about 70 billion dollars processed each year in fee payments to private educational institutions in India, $37 billion in the GCC (Gulf Cooperation Council) and $34 billion in the rest of the Middle East and Africa, the market is large but largely untapped.
Talking about competitions, Raman adds: “There are players who provide services in specific areas like
in payments, and there are several GPs and banks offering payment rails; but these are generally generic and not contextualized to the unique needs of parents/schools. In lending, some players offer 0% EMI products with traditional lending approaches. Banks and NBFCs find credit in this sector attractive and stable and typically focus on infrastructure or institutional lending.
Talking about the business model of the startup, Raman says, “We are a financial services provider and earn margins based on the transactions that take place through our app. We earn revenue from payment and installment transactions.
We work with lenders, NBFCs and BNPL providers, who provide the credit. Interest and prices are assessed by them based on criteria such as loan history, volume, duration, etc.
The YS design team
Without disclosing his earnings, Raman mentions that since its launch, zenda users have grown 20-fold, with the app reaching more than $100 million annual contract payment volumes by Q4 2021, in the United Arab Emirates and India.
Raman, without mentioning current numbers, claims to have a strong pipeline of 1,000+ establishmentswhich they plan to put online in the coming months.
Funding and way forward
Started since its creation, the Dubai-based startup has obtained a $9.4 million oversubscribed funding round in April 2022, with participation from STV, COTU, Global Founders Capital and VentureSouq.
The startup plans to use the capital for product development and market expansion in India.
zenda is eyeing greater growth this year as it accelerates its expansion beyond the UAE using the new funding that will also support its product refinement.
“The funds will primarily be used for market expansion in our first two core markets, the United Arab Emirates and India; and later in other markets in the region and beyond. Our goal is to provide exceptional experiences for parents and end users, and we intend to put considerable effort into creating these experiences and improving the products. We will continue to grow our technical and execution teams over the coming quarters in Dubai and India,” adds Raman.
In the long term, zenda envisions going beyond paying tuition and encompassing other aspects of personal financial management.
“Our mission is to help families thrive. Our goal is to make it easier for families to manage their money and support their financial well-being. We see a need for family-centric, simple and collaborative products,” Raman quotes.