MPower Financing with Manu Smadja | E306

Enabling lending to foreign students.

In today’s episode of Fintech Impact, we have Manu Smadja, CEO and Co-Founder of MPower Financing. MPower Financing is a company that specialises in lending loan to international students because they have their own specific challenges that are encountered by many people who come to a foreign country.

Episode Highlights:

  • 00:38: Manu provides a brief overview of Empower Financing, highlighting its position as a leader in international student financing in North America. He emphasizes their focus on empowering students from 200 countries attending over 400 universities in the US and Canada.

  • 02:30: Manu elaborates on his realization about the ongoing challenges faced by international students, citing personal experiences, and the turning point a decade ago when a student approached him for financial help, sparking the idea for MPower.

  • 03:13: Manu shares the pivotal moment when a student was on the verge of dropping out due to a small financial shortfall. This event led him to question why no one was addressing this issue and motivated him to establish Empower in April 2014.

  • 04:23: Manu mentions that international students may resort to loans in their home countries, but these often come with high-interest rates, complex processes, and collateral requirements.

  • 05:40: Jason discusses the challenges of issuing loans to young people with no credit history or assets, and Manu emphasizes the need for alternative data sources.

  • 07:11: Manu discusses the complexity of acquiring customers overseas and the challenge of servicing loans globally, which has been a focus for their company.

  • 09:54: Jason inquiries about the challenges in convincing capital markets to invest in a two-sided marketplace targeting international students. Manu explains that belief in the concept varied, with some early supporters relying on personal experiences and others requiring more data.

  • 11:21: Manu describes key data points that helped build credibility, such as the performance of students returning to their home countries or going to third-party countries for employment. The COVID-19 pandemic provided another opportunity to showcase their stability compared to traditional lenders.

  • 13:09: Manu highlights the importance of character, creditworthiness, and the proof of capability demonstrated during the selection and integration process for international students.

  • 14:09: Manu explains how MPower leverages data on placement rates, graduation rates, and post-graduation salaries as part of their compelling value proposition.

  • 15:55: Manu talks about scratching the surface in lending services in the US and Canada, jokingly referring to MPower as a "boring company" focused on doubling down on their core offerings.

  • 17:03: Manu discusses the lack of options for many international students in their home countries, highlighting the challenges they face in securing loans locally and explains the cumbersome process involved in securing a loan from a retail bank in a student's home country involving co-signers, paperwork, and lengthy approval times.

  • 18:32: Manu compares the traditional loan process to MPower's approach, emphasizing the company's role in making the market for students who can't secure loans locally and providing a better experience for those who can.

  • 21:50: Manu reflects on the challenges of fundraising, both in terms of equity and loan capital. He mentions the need to build proof points around student data, emphasizing the balancing act of focusing on growth while being judicious about fund deployment.

  • 22:40: Jason shares his perspective on the irony in the fundraising process for start-ups, where founders have to sing and dance for money every 18 months, diverting attention from building the business.

  • 24:58: Manu shares that the impact on students is what excites him the most, citing Trustpilot reviews where students mention that MPower made their dreams of studying in the US and Canada come true.

  • 25:27: Manu emphasizes that the impact on students helps the team stay motivated and focused on understanding and addressing the needs of the students.

Key Points:

  1. A leader in international student financing, MPower Financing focuses on empowering students from 200 countries attending over 400 universities in the US and Canada.

  2. The company's mission is to address the unique financial obstacles encountered by students studying abroad.

  3. MPower Financing leverages alternative data for credit assessment, providing loans to international students who may face challenges securing loans in their home countries.

Tweetable Quotes:

  • "Leveraging data on placement rates, graduation, and post-grad salaries, MPower Financing ensures a compelling value proposition for students worldwide.”

  • "MPower Financing was born out of the realization that small financial shortfalls were pushing international students to drop out. We aim to bridge these gaps and make education accessible."

  • "In lending to international students, we challenge the misnomer of treating no-file students like bad-file ones. Credit is a trajectory, and we leverage alternative data to understand and support their unique journeys."

Resources Mentioned:

Fintech ImpactJason PereiraFintech