WASHINGTON – U.S. International Development Finance Corporation (DFC) today announced that it has disbursed a $15 million loan to Varthana to expand access to quality education in India by providing critical financing to schools that serve low-income students.
“DFC is proud to support Varthana, which is helping low-income students in India access quality education so they can learn, thrive, and give back to their communities,” said DFC Chief Executive Officer Adam Boehler. “Varthana is a testament to the impact that early-stage ventures can deliver when given the opportunity to scale their innovative approaches. We are committed to supporting clients like Varthana during these challenging times. Their efforts are more important than ever.”
“We are extremely excited to extend our existing partnership with DFC through this transaction, especially at a time when schools are severely affected by the COVID-19 crisis," said Varthana Chief Executive Officer Steve Hardgrave. "As a specialized lender to affordable private schools, Varthana is well positioned to provide both capital and remote education solutions to help schools navigate the current challenges. DFC's willingness to provide funding in the midst of this crisis truly demonstrates their commitment to support the education sector when it most needs it, and for that we are very grateful.”
DFC financing will help Varthana reach more schools by meeting the company’s need for longer-term capital that is unavailable in the Indian market. The financing will be especially critical as schools work to adapt to and recover from disruptions caused by COVID-19. In addition to providing timely loans, Varthana has been helping schools implement digital learning tools and teaching methods so that students can continue their education remotely through the pandemic.
India’s economy has grown rapidly over the last several decades, but more investment in education will be required to keep pace with this growth and extend its benefits across a broader segment of Indian society. Low-fee private schools have stepped in to provide low- and middle-income families access to quality, affordable education. However, these schools need better access to financing in order to grow and improve.
Varthana was founded in 2013 to help bridge this financing gap and substantially expand access to quality education for low-income populations across India. The company utilizes a unique cash-flow underwriting model that enables it to flexibly and sustainably provide loans to low-fee K-12 schools. The typical Varthana borrower operates a school that charges $5 to $25 per month in fees.
Varthana’s clients use its loans to grow and upgrade their schools, including by building new classrooms, purchasing computers and learning materials, and investing in teacher training. The company also offers technical assistance designed to help schools evaluate and improve their instruction and management. To date, Varthana has reached nearly 4,500 schools, which educate over three million students and employ more than 100,000 teachers.
DFC’s investment follows a 2016 loan to Varthana as part of the agency’s Portfolio for Impact and Innovation (PI2), an initiative intended to support and scale early-stage social enterprises. Varthana has grown its portfolio by more than 400 percent since receiving this earlier DFC support.
U.S. International Development Finance Corporation (DFC) is America’s development bank. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today. We invest across sectors including energy, healthcare, critical infrastructure, and technology. DFC also provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.