It was in Africa that Carmina Bayombong, child of non-government organization workers, first caught glimpse of poverty. This was cemented around a decade later at the University of the Philippines Diliman where while finishing her degree in industrial engineering, she met other students who were forced to drop out due to lack of resources.
This led Bayombong, now 24, to establish InvestEd: a Filipino startup engaged in matching student borrowers with lenders via an online platform.
Launched in December 2016, InvestEd offers student loans amounting from P10,000 to P80,000. Students need only to create a borrower account invested.ph online, get notified of qualification within seven business days, be interviewed for a final assessment, and sign a loan agreement that they will pay their loan after finishing their degree.
InvestEd gets investors—lenders—who are promised that they can grow their money for 7%-11% per annum with a minimum amount of P100,000, deposited in tranches.
To secure their investment, a six-point approach to repayment is enforced. This includes multiple matching, where a lender is matched with at least three borrowers to reduce risk, as well as a credit investigation technology using a credit scoring and profiling algorithm powered by artificial intelligence. Lenders are repaid bi-monthly over 12 to 36 months, depending on the student’s loan amount and starting salary. An amortization schedule is provided after depositing their pledge.
Invested was recently awarded a $100,000 grant from the government of Dubai last week to grow its number of loaners from 70 to 3,500. The company is also currently developing a scoring system to conduct the applicants’ background check using social media data, as well as a technology that will shorten the application process to 10 minutes.
“In 2017, we had a different business model,” Bayombong shared. “We didn’t have service fee, and we only had a very low interest rate. It couldn’t even cover 20% of our costs. We could’ve kept our previous business model and just rely on donations and lenders. With that model we would probably help a thousand students in 10 years.”
But with the revamped and “more sustainable” model, she says, “we could help 10,000 students in just three years.”