A $100M raise will help MPower Financing raise its international profile

Downtowm-DC fintech company MPower Financing said this week that it raised a $100 million equity round to grow its presence in the international student loan market. The company also nabbed an additional $52.5 million in unrestricted corporate debt, which will be used for operational purposes, CEO Manu Smadja told Technical.ly.

Tilden Park and King Street Capital Investment were the two main investors in the round, with additional funding from Pennington Partners and Capital Institute.

It’s the second investment raise for the company this year. The funding comes on the heels of a $30 million raise MPower completed in March, when the company secured an additional $5 million on top of $25 million it raised in January. MPower, a lender for international and DACA students, has also doubled its employee count to 80 team members since the beginning of the year.

According to Smadja, the funds will be used to further grow the team, particularly in its Bangalore location. The company will also continue to build out its loan portfolio. MPower, Smadja said, will also be buying a percentage of its own assets, as well as investing in marketing to continue the company’s growth in the industry.

“What we’re investing in beyond that is continuously making the digital experience even better, anticipating where we can pull information about a student so that we make their application work faster and seamless, and trying to figure out how we can add value through data,” Smadja told Technical.ly.

Even with COVID damaging income sources for many students and completely stopping travel, Smadja said MPower remained strong in 2020, which is why it was able to secure such a large round. With many international students unable to return to their families over breaks, losing on campus jobs or needing temporary housing, MPower’s digital lending offered access to help with loans or emergency funding.

With COVID, the company reached a “proof point” which amplified how well students were doing, even under financial stress, Smadja said.

“What that put us in a position to do is it gave us access to a much broader spectrum of investors,” he said. “We were able to prove that not only were our borrowers performing well in good economic times — so, they’re performing better than American citizens in terms of repayments. But also during stressful times, they were more stable than American citizens.”

With the raise, MPower hopes to help 5,000 students with loans in 2021. But Smadja said the company still has a long way to go, which is why it’s investing heavily in marketing and awareness-building. It’s also making strong moves to invest in tech, taking on the competition of brick-and-mortar lenders and resources to make a name for itself in the student loan space.

“We see again that we’re a very, very small fraction of the overall market. We’re 0.3% of the available opportunity out there in international student lending,” Smadja said. “So we could grow 10x and still be only 3% of the market. That market is fast-growing and that market, in the way I’m defining it today, is fairly narrow. So we have a long way to go.”