Originally found here:http://www.vilcap.com/blog_startup_in_the_spotlight_mpower
MPOWER Financing is one of our personal heroes here at Village Capital. The company teamed up with Village Capital just weeks after its initial founding last year, and was recently peer selected for investment during our EdTech: DC & Chicago 2015 program.
MPOWER’s goal is to remove financial barriers to higher education by lending to high potential students who are excluded from the traditional banking system.
This is done by providing high-potential students with loans that bridge the gap between what students receive from scholarships, federal loans, or family funds, and what they actually need in order to graduate. MPOWER further provides students with financial education tools, a means to build credit histories, and beneficial financial products to assist students post-college.
We recently caught up with co-founder Manu Smadja to discuss MPOWER’s mission, their experience with Village Capital’s cohorts, and their promising future.
Why did you and Co-Founder Michael Davis start MPOWER?
Coming from France, I had a difficult time financing my education. My family and I worked tirelessly, saved diligently, and applied for scholarships, but we were always falling short. This difficult experience occurred again 10 years later when my sister came over to the U.S. for her studies.
Federal Aid was restricted to U.S. citizens, while private banks wouldn’t lend to international students without a strong U.S. cosigner. Unfortunately, I was not alone. Many of my friends confided that they were on the verge of dropping out due to the high cost of college. A few of them eventually did.
Several years later, a brother in my Latino fraternity emailed alumni sharing that he was about to drop out of college because he could not afford his $500 rent. I helped pay his rent, but was appalled that such a bright engineering student would be forced to concede his high potential for one month’s rent? The system was simply broken. Something had to change.
How were MPOWER’s first few months?
My co-founder and I started MPOWER with diverse backgrounds. I came from a consulting background at McKinsey while my co-founder, Mike Davis, was a serial entrepreneur. Neither of us had worked in a relationship-driven education sphere. We had (and still have) a lot to learn in an intricate education space.
In the end, we had to be confident (or naïve) enough to think we could change an industry, patient enough to understand progress would be slow, humble enough to understand that we would only solve a small portion of the problem, but bold enough to continue helping as many students as possible no matter what would come our way.
What were some key takeaways from Village Capital’s programs?
Less than 30 days after launch, we entered Village Capital’s US Fintech ’14 program. We learned a lot from peer start-ups in the cohort and from mentors. Ultimately this program taught us that entrepreneurship, at its core, is relationship driven. Coming from a data-driven background, this altered my mindset as MPOWER grew.
We decided to come back! The US Edtech ’15 program gave us the capacity to form relationships in a more unfamiliar education sphere. We were fortunate enough to receive funding at the end of the program, but peer selection was most helpful in exposing potential flaws in our process. We were able to take this valuable input to gain traction by acquiring more students and creating a pilot program with Harvard.
What is on the horizon?
Right now, we are working to form formal partnerships with universities. We lend directly to students at nearly 100 universities nationwide but would love to extend more formal partnerships so we can increase our outreach to domestic and international students.
We’re also 80% done with our current seed funding round and have opened up the remainder on AngelList; we’re now listed as one of the top 15 hottest startups on the platform! been picked up by AngelList just this past week. We are using these funds to expand our lending licenses to more states, further automate our loan platform, and increase our marketing efforts to more schools and students!
Overall, our major push at the moment is to secure more than 150 loans by mid-September. We are making great progress, but ultimately it is not about acquiring large numbers. It is about changing the lives of our current students and propelling them towards a bright future.