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Varthana

Varthana provides loans to affordable private schools, enhancing education infrastructure and quality.

Facts

 Investee Varthana, founded 2013
 Location India
 Sector Education
 Funding Start 2013
 Funding type Equity
 Website http://varthana.com/

 

Impact

Context

Lack of expansion capital is a major hurdle to the progress of affordable private schools that offer low cost (average monthly fee of USD 5 to 20 per student), high quality education to low-income household children. These schools are not viewed as business entities by banks; their typical loan requirement (approximately USD 15’000) is too small for banks and too big for Micro Finance Institutions. As a result, they cannot access the right type of financing, and therefore have to compromise on quality of infrastructure as well as the capacity to enroll students.

Solution

  • Varthana aims to fill the current gap of financing affordable private schools by providing loans to help school proprietors grow and improve their schools’ infrastructure.
  • Varthana offers loans ranging from USD 2000 to USD 80’000 at interest rates ranging from 20% to 25% with monthly repayments over a 2 – 5-year period.

Impact depth

Varthana offers financial support to schools to increase capacity and thereby access to education for students from low-income households. The loans also enable schools to improve infrastructure to provide better quality education.

By bridging the financing gap for affordable private schools, Varthana helps

  • Improve access and quality of education: Children from less advantaged backgrounds have better access to quality education, which empowers them to take control of their lives.
  • Catalyze systemic change in the affordable quality education sector in India: Varthana’s support plays a critical role in growing the affordable private school segment, which already includes more than 250’000 schools and 100 million students.
Impact Reach 2012/13* 2013/14* 2014/15* 2015/16* 2016/2017*
# of schools funded 20 168 704 1'796 2'700
# of students impacted 11'898 94'769 316'468 826'944 1'642'747
Loans disbursed (USD millions) 0.2 2.5 10.2 31.1 44.1

 * Fiscal year April to March

SDGs

By investing in Varthana, we align with and contribute to four of the United Nations’ Sustainable Development Goals.

"LGT Impact's ability to provide all flavours of capital is a very special quality that is particularly useful for social enterprises with a wide range of initiatives. This support allows us to address issues that are critical for our business as well as issues that support the broader ecosystem. Another advantage is LGT Impact's ability to invest at various stages of the business. Having a committed partner that can see through the full growth cycle of an enterprise is extremely helpful."

Steve Hardgrave, Co-Founder and CEO of Varthana