Brighter Investment – 28 July
In developing countries, many cannot afford higher education, especially women and students from poor areas due to financial difficulties. These 60 million students graduate high school every year with top grades and the ambition to attend tertiary education. If properly educated, these students would increase their income by 5x resulting in a 50%-80% ROI for each student. Governments, charities and scholarship providers do not have sufficient funds to sponsor the $600 billion blue ocean market to both higher education offers and opportunities to change the world.
Brighter Investment has taken a data-driven approach to solving this problem by developing an innovative underwriting algorithm that allows for the selection of the most promising students. Students receive full funding for their degree programs which includes the full cost of tuition, accommodation, and a monthly stipend. In the course of a student’s degree programs, they are paired with a career mentor to help ensure a successful transition to employment. After completion, students are required to pay a fixed percentage of their monthly incomes from employment to Brighter Investment. This income-sharing agreement model ensures that no student ends up with insurmountable debt. Repayment duration is calculated based on an assessment of the student’s future income and the funding required to complete the education program. To ensure that students make repayments as expected, a combination of social, practical, and legal incentives are in place.
Brighter Investment’s innovation contributes to economic and social development while addressing SDG goals. For instance, its model contributes to the ‘no poverty’ goal as its students are able to increase their income 3-5x which ensures better lives for themselves and their families. In demand graduates and their higher tax payments contribute to SDG 8, decent work, and economic growth. Not only does the program provide access to quality education for students, but it also incentivizes education providers to improve the job relevance of their programs and thus contributes to SDG 4, quality education. Brighter Investment’s financing model further facilitates gender equality and reduced inequalities in general by giving every student the opportunity to access this financing option based solely on their own potential, SDG 5, and 10.
Besides Ghana’s government-run student loan trust fund, which is underfunded and only provides small traditional loans to very few students that aren’t sufficient enough to pay for a degree; as of present, there’s no notable competition that faces Brighter Investment in Ghana
Worldwide there are various models of what is called ‘Income Share Agreements’ or ISA’s. Lumni in Latin America is the largest of these. Most of the experiments in this space are by schools themselves. To Brighter Investment’s knowledge, they’re currently the only ones approaching this as an investment fund where data drives their selection of students and degrees to build diversified portfolios of students across different industries/uni’s/geographic regions.
Brighter Investment believes that their ability to pick qualified students, and knowing what terms to offer them, will allow them to outperform the competition. Their online platform allows automation of most tasks around student selection, monitoring, mentorship, and collection. This ease of use software provides convenience and proves to be their competitive advantage. Brighter Investment’s strategy is very much focused on further improving these aspects of their business which are also the aspects that are valuable to a potential acquirer.
Over the last 4 years, Brighter Investment has invested in a portfolio of 389 students at 7 partner universities in Ghana. The first 93 graduates are repaying and outperforming anticipated projections. Large institutional investors have confirmed that the demand for an investment product like Brighter Investment’s, with its predictable steady cash flows and inflation hedge, is larger than the supply, as it continues to still grow. Brighter Investment attributes its secured partnership with Vancity, their first institutional investor, to the achievements they’ve gained. Their objective for the next three years is to build the track record and scale that makes their student cohorts an interesting new asset class for institutional investors and other major funding institutions.
Financing is a core aspect of their business model but they continue to receive hundreds of applications for funding each year. In light of the current Covid-19 crisis, investment activities have been quite slow around the world. Since it is hard to predict how long the effects of Covid-19 will last, it’s difficult to predict how the financial year 2021 will be. Brighter Investment, therefore, plan to continue to reach out to investors and engage existing investors to secure funds for new cohorts of students next year.
Thijs Mathot, CEO and Co-Founder – As an aerospace engineer with a business degree, Thijs specialized in the intersection of tech, data, and finance. He leads the company and works on the underwriting technology and investment model. He also worked as an engineer in the space industry. For a real estate developer, he worked on public-private partnership projects and has also set up the North American branch for a Dutch software startup.
Richard Adarkwah, Co-Founder – As co-founder of Brighter Investment, Richard runs the student side of the business in Ghana. Richard has a degree in Physics, worked for UNICEF as a project manager on education projects, and for Google on their education product. With his experience in the education sector in Ghana, both professionally and as a student facing financial difficulty himself, Richard runs the student program.
Belinda Kugblenu, Investor Relations Manager – Belinda is a finance and audit professional who is in charge of investor relations. As the Investor Relations Manager at Brighter Investment, Belinda holds a degree in Accounting from the University of Ghana. She worked in Finance and Auditing roles at the University of Ghana and at Deon & Noed International. She has always believed that education is the major cornerstone for success in developing countries so she takes great pride in her current role at Brighter Investment.
Georgina Amissah – Georgina is responsible for customer service and collection. Georgina has always had a passion for the role banks play in society. With a degree in Finance and Banking, Georgina worked on various collection and customer service roles at the Agricultural Development Bank in Ghana. She now applies that experience to professionalizing the student-facing functions at Brighter Investment.
Joy Lamptey, Student Success Manager, and HR Specialist – Before getting an MBA from the University of Ghana with a specialization in Human Resource Management, Joy worked as a System analyst at NEM insurance in Nigeria. Joy now uses her HR and analytical skills to set up Brighter Investment’s mentorship system and manage the community of employers, teachers, and students in Ghana
Alfred Melchizedek Bensah-Mensah, Marketing, and Business Development – Alfred is a multi-disciplinary communications specialist that specializes in the crossover of the arts and business. Merging the disciplines of design, film, literature, and music, he has created branding and communications campaigns that tell impacting stories for a wide variety of companies ranging from tech startups, to musicians, as well as Ghana’s Ministry of Education. In that last role, Alfred made it his career goal to design and execute multifaceted campaigns aimed at improving the lives of the underprivileged. He is passionate about initiatives that seek to level the playing field for all.
Brighter Investment’s upcoming goal for the year is to support 1000 students and to achieve that, they hope to raise 2 million USD. Once the funds are secured, it will be invested into their next cohort of students who will be starting a new academic year. They estimate that $100,000 can fund 13 students for a full 4-year degree. This means that with a $500,000 funding, 65 students will be funded for 260 study years. If these distributions are reinvested for 12 years and paid out after, this investment will support 120 new students.
Over the years, Brighter Investment has used crowdfunding as its fundraising strategy. They have obtained fundings from impact investors, family offices, foundations, and their first institutional investor, Vancity. In the long term, Brighter Investment will make their model an interesting asset class for investors, specifically institutional investors as they have the capacity to help fulfill the market demand for higher education.
Following continuous growth, Brighter Investment has plans underway to expand to other African countries, the first being Uganda. But this has been put on hold because of the circumstances surrounding the Covid-19 crisis.
The way Brighter Investment works is simple: funding provided by investors is pooled and invested in talented students within developing countries experiencing high growth. In exchange for their university education, students repay a percentage of their income after graduation. With the help of universities, banks, and high schools Brighter Investment ensures that this all works efficiently and reliably.
It’s estimated that their students graduate in 4.3 years on average. For six years after graduation, they pay a percentage of their income (typically 25%) back to Brighter Investment. After costs, this provides client investors with a projected annualized return of 9%.
Brighter Investment fosters customer engagement by forming social ties with their students and engage with educators who can help attest to the academic performance of students. To facilitate this, during the application process, a teacher’s recommendation is the single most reliable indicator of a student’s chances of success. Teachers in developing regions recommend their brightest students to us for a proven way out of poverty. Reconnecting with teachers for new recommendations provides an effective low-cost student recruitment approach.
In partnership with banks, there’s an established extensive verification process already in place. In exchange for high potential clients, they perform an identity check on new students and provide students with a bank account to distribute the monthly allowance.
One of Brighter Investment’s key partners are universities who are eager to diversify their student body. They assess the students according to the standard selection process and provide education. Student information is shared back to the company to monitor progress. Brighter Investment selects university programs that offer the highest return and ensure quality recruitment.
Therefore the success of their model is dependent on these stakeholders.