Cameron Stevens - Prodigy Finance

Prodigy Finance was launched in 2007 by three INSEAD MBA graduates who experienced the difficulties of financing an international MBA firsthand. The innovative global platform offers international students the opportunity for funding at a leading business school, whilst investors are able to receive competitive financial and social benefits.

Our investors believe in our mission, and with a repayment rate of over 99.2%, the performance speaks for itself.”

Q. Tell us about yourself and your role at Prodigy Finance…

I am a serial entrepreneur who derives a great sense of fulfilment in focusing on social entrepreneurship and early stage technology investing. I am the co-founder, and CEO, of Prodigy Finance, which is a higher education loan platform enabling qualifying investors, who meet suitability criteria, to earn a financial and social return by funding future leaders from around the world attending a top business school.

What I love about Prodigy Finance is the fact that each day I can have an immediate impact on the future of the business.

I am also a bit of a foodie, love chilli’s, street food and travelling.

Q. Tripling your staff complement over the past two years – what’s it like to work for Prodigy Finance?

Prodigy Finance is dynamic. We truly believe in removing the funding barrier for higher education and in providing affordable loans to international students looking to attend a top business school. As we are continuously pushing the boundaries in adding new schools, or always trying to improve our offering to students, investors and schools alike, Prodigy Finance is always a vibrant and energetic environment.

The tripling of our staff compliment is a testament to the demand that exists, as well as our commitment to continuous improvement from a product and a service perspective for both students and investor alike. Our team has grown in South Africa, the UK, as well as in the USA, with plans in 2016 to expand into the East.

Q. Prodigy Finance has created a global execution platform that gives qualifying investors the opportunity to fund international students in a meritocratic fashion – what motivates you as a business?

There are a number of motivating factors, the first being that I have experienced first hand the frustration of sourcing financial support when looking to complete my MBA at INSEAD in 2006. The second being that there are a significant number of talented students out there whose only barrier to their MBA is funding. Surely if you have been accepted into a top ranked business school, to have funding being your biggest challenge seems like a lost opportunity?

The final motivating factor is that Prodigy Finance is the platform that facilitates multiple benefits ranging from increased diversity of students at the business schools, allowing international students access to funding, as well as providing qualifying investors with a product which delivers both a social as well as a competitive financial return.

All of the above elements create an opportunity for Prodigy Finance to really contribute to our global society by supporting higher education.

Q. What is the first-hand problems international students face when funding postgraduate education?

For a number of domestic students, there can be a number of financial options available to them, depending on their country of residence. However, international students are often dealing with a system that has not adapted to be able to quantify their risk, or when it does, uses more traditional risk assessment methodologies rather than focusing on their potential. Traditional banking models are not set up to loan to international students, considering we have processed more than USD$130 mil in the past 6 years, there is clearly a demand for this funding model.

Q. Basing on the significant investments from Deutsche Bank, Credit Suisse, Balderton Capital and entrepreneur Ed Wray, there is evidently a strong demand for investment opportunities in the education division. Is providing investment products that focus on the development of human capital the key factor in this and if not, then what is?

Social impact is a category of investment that is constantly adapting and evolving. Investors these days are looking for products, which not only deliver a social benefit, but which also deliver a competitive financial return. Prodigy Finance is able to offer just that - by investing in future leaders, qualifying investors who meet suitability criteria are able to receive a financial return as well as know that they are supporting international students in their higher education. I believe that our investors have a vision to create an investment product that benefits all parties, from the schools to the students and the investors, all which support higher education.

Q. What recent innovations are making capital more accessible and transparent?

The increased accessibility and awareness of funding options, driven by Crowd funding, peer-2-peer lending, are all offering alternative product offerings relative to traditional banks. Whilst there are banks such as Credit Suisse who have identified the benefits of investing in future talent, changes in investment models, and awareness of these platforms, are having a significant impact in the funding arena.

Q. What are the most concerning cross-border risks that lenders such as Prodigy face in the UK?

Prodigy Finance is regulated by the Financial Conduct Authority (FCA) in the UK for both its consumer credit activities and its investment activities. Investors may be professional clients or retail clients for the purpose of the rules of the FCA, which regulates how we engage with our customers.

The loan agreement and loan origination process is set up to be valid and enforceable under UK Law, with the dispute to be settled under arbitration at the London Court of International Arbitration.

Our lending model is based on multiple comprehensive data sets; along with clear and transparent legal compliance guidelines which both protect our investors and students alike. Working closely with the schools with whom we have existing loan programmes also contributes to minimising the risks associated with cross-border lending.

Q. What systems does Prodigy use to successfully monitor and manage international repayments?

Prodigy utilises a combination of methodologies that support our current repayment rate in excess of 99.2%. These can be clustered into 2 groups, the first being a community funding approach, the second being a comprehensive legal framework.

The community funding approach relies on qualifying investors investing in future talent and being able to view the repayment status of the students in which they have invested. As social currency and relationships are so important at business schools, the community aspect provides students with an additional motivation to pay their students loans.

Having developed a system to enforce our loan agreements internationally, we have the means with which to recover funds from a student who is refusing, or is unable to, repay his or her loan. It is important to note that legal enforcement remains the final option once all other avenues have been explored.

Q. What makes Prodigy Finance stand out from the crowd for investors?

Once qualified, the combination of being able to invest in products that deliver competitive financial returns, alongside a tangible social benefit, whilst supporting higher education is something unique in the educational space.

We lend to high-potential future business leaders with a particular focus on bringing emerging market talent to the top business schools. Our students to date consist of 75% emerging market, with 82% of our total base not having had sufficient funds to attend business school.

Our investors believe in our mission and with a repayment rate of over 99.2%, the performance speaks for itself.

Q. There are limited investment products available to investors that deliver both competitive financial and social benefits collectively; do you feel this has impacted the success at Prodigy Finance?

We feel that this definitely contributes to the success of Prodigy Finance, however the investment opportunity has significant opportunity for growth. There are investors who would qualify to invest in our investment products and are interested ­in the benefits of our products, however have yet to be exposed to Prodigy Finance.

We look forward to increasing the awareness of Prodigy Finance amongst these investors so that, once qualified, we can provide investment opportunities in international students.

Q. What has been the key attributes to the impressive 400% growth rates for this year? Where will this develop in the coming year?

Multiple factors have contributed to the significant growth rates being experienced at Prodigy Finance; some of these include the following:

Increased access to funding sources e.g. Credit Suisse launching worlds first education Note $25 million in October 2014.

Increasing our school breath and depth of funding, as well as launching into new schools in other geographies.

Significant capital and debt funding, $120 million in total, being injected in Prodigy Finance by Deutsche Bank, Balderton Capital, Credit Suisse along with other institutional and private investors in August of this year.

Prodigy Finance continuously focusing on improving its offerings and processes for students and qualifying investors alike.

The next few months and coming year, will see a range of additional developments taking place focusing on the broadening of our business school base, as well as including additional postgraduate Masters courses as well as expanding our reach into Asia. Over and above this, we are committed to continuously improving the user experience for our qualifying investors and students.

Q. To continue to deliver financial and social benefits to qualifying investors, what could be of threat in the coming few years?

We are continuing to see investors consider investing in human capital as growing market, and talented students are continuing to reap the benefits of a differentiated higher education. Increased competitiveness in this category will become more of a challenge as the market continues to grow.

Currency fluctuations also have the potential to have an impact, however focusing of the granting of affordable loans does assist in minimising exposure to currency fluctuation.

Q. Since 2007, Prodigy Finance has seen just over £80m through the platform to fund over 2050 students from 92 nationalities with repayment rates in access of 99% - what further developments will we see over the next 3 years, how will you stabilise repayments’ loss to under 1%?

Our strongest deterrent for non-repayment is the involvement of our community. As a core part of the business, we have the school community invest in our products. Students choosing to attend a top tier MBA, not only do so for the hard skills they develop, but also for access to the extensive alumni network. If a student chooses to not repay their loan, whilst knowing that alumni have invested in their higher education, this has the potential to negatively influence their reputation within the broader alumni network.

For a multitude of reasons, Prodigy Finance will continue to focus on driving investment from the alumni community, thereby continuing to grow the community base which will assist in continuing to deliver repayment rates in excess of 99%.

Q. Is crowdfunding bringing diversity to business?

Crowdfunding increases the accessibility and choice for investors to be able to invest directly in products, ideas or services which they previously would either not have known about, or would not have had the opportunity to invest in. This increased awareness, as well as investor base, does contribute to a diversity of investors.

Q. With the rise of crowdfunding most popularly via the internet in recent years, what crucial advancements do you feel this has impacted?

The Internet removes borders, both from awareness as well as an opportunity perspective, thereby increasing individuals ease of access and awareness of opportunities that exist around the world. This growing trend, along with the more recently emerging trend of investing in higher education, will continue to provide opportunities for qualifying investors to invest in higher education through the Prodigy Finance platform.

Q. Outside of crowdfunding and funding platforms alike, what funding opportunities are available to students studying internationally?

There are currently a limited number of banks and credit unions that are able to lend to international students. The options for students choosing to study internationally (as opposed to domestically) are very limited. The ability to quantify cross border risk, along with being able to ascertain the future potential of a student attending a top business school, is not something that most current banking or credit unions models are able to achieve. Scholarships exist with which to assist students with funding options, however the number os scholarships available are not sufficient so as to match the demand for students looking to complete their MBA.

Q. In 2014 the UK government announced the introduction of a postgraduate loans system – how will these influence international students?

As far as we are aware these postgraduate loans come into effect in 2016/2017 and will only be for students under 30 years of age who choose to undertake postgraduate Masters at English universities. There may be a slight increase in UK students choosing to rather study in the UK rather than to study internationally, but we don’t expect this to play too big a role for those students choosing to study internationally. Additionally the financial support is limited to £10 000 per annum.

Q. As it stands, what are the current plans for Prodigy Finance’s expansion into Asia next year?

Asia will be a focus for us in 2016, with regard to both Asian students looking to study internationally, but also developing relationships with schools in the region. Asia is home to some top business schools and we’re in the early days of building our relationships there.

Q. For international students, what aspects of the financial crisis do you feel has impacted postgraduate education the most?

There have been differing impacts that vary from student to student. That being said, the financial crisis did see the withdrawal of some banks from student lending. Risk adverseness, and not being able to quantify future potential, has definitely impacted accessibility to postgraduate funding options.

Q. In your opinion, what makes a good business school?

There are so many elements that make up a good business school depending on the individual needs of the student. Some of the considerations include the alumni network, the schools reputation, the diversity of the business school, as well as the faculty and opportunity to tailor your postgraduate studies to your needs.

Cameron Stevens is the CEO and Co-founder of Prodigy Finance. He is a South African serial entrepreneur with a special focus on social entrepreneurship and early stage technology investing. He previously co-founded a corporate advisory firm in South East Asia, which successfully listed a technology company on the Malaysian Stock Exchange. During university, he founded a 30-person staffing company in the events industry, which focused on upskilling the unemployed. In his personal capacity, he is a chilli fiend, street food aficionado, bookworm, planespotter and relentless traveller.

Visit: Prodigy Finance