Rise of Edu-Fintech, Sarvam AI Opens Doors, and Zepto Cafe Scaling Down

A few years ago, India’s edtech sector was on fire. Unicorns were minted. Ads flooded prime-time TV. And investors couldn’t get enough. But the frenzy has died down. Edtech’s biggest names - Byju’s, Unacademy, Vedantu - are struggling with slow growth, funding crunches, and layoffs. Yet, amid this slump, one segment is thriving: education-fintech.

Loan enablers like Leap Finance, Propelld, Eduvanz, GrayQuest, Credenc, and GyanDhan are booming, and not only in terms of funding. Their revenues are growing, their NPA (non-performing asset) ratios are low, and most of them are building sustainable business models with actual unit economics.

It’s ironic. While the traditional edtech platforms - built on content, coaching, and distribution - are crumbling under high CACs and capital inefficiencies, the backend players helping students pay for education are thriving. And there’s a reason - demand for education hasn’t slowed down. And the supply side - dominated by inflated, VC-fueled platforms - is correcting.

Let’s talk numbers.

Propelld crossed ₹145 crore in revenue in FY24, a 3.7x jump from ₹39 crore in FY23. Its losses narrowed to mere ₹1 crore. Leap Finance’s revenue shot up to ₹106 crore in FY23, and they’ve facilitated over $175 million in study-abroad loans to date. GrayQuest claims 5 lakh enrolled users and ties up with over 6,000 institutions across India. Eduvanz reported a disbursement of ₹335 crore in FY23, and Credenc has recently tied up with banks to increase its loan offerings. These aren’t vanity metrics - these are signals of product-market fit in a high-need, underserved market.

What makes edu-fintech different? First, low CACs. Unlike edtech platforms that burn crores acquiring users via TV and YouTube ads, edu-fintechs tap into organic **demand. Students are already looking for loans, it’s not a push product. Second, the supply of credit has been relatively inefficient and paper-heavy. So these startups built digital-first lending journeys with quick approvals, flexible EMIs, and institutional tie-ups.

Third, and most importantly, they don’t take the education risk. That burden stays with the institute or the student. Edu-fintech players are infrastructure, not content. Their success doesn’t depend on test results, completion rates, or NPS scores. It depends on credit underwriting and collections, which they can control.

There’s another shift in play: the rise of mid-tier institutions. While top-tier IITs or IIMs still attract scholarship money or easy bank loans, most Indian students attend mid- or low-tier colleges. These colleges don’t have great placement records, so traditional banks hesitate to lend. That’s where startups like Propelld or GrayQuest step in - with custom EMI plans, student risk profiling, and flexible tenures.

And then there’s the study abroad wave. India is the world’s second-largest market for international students. Leap Finance and GyanDhan are doubling down on this segment, where average ticket sizes are $30,000–50,000, and repayments are structured over years. This is a sticky, high-LTV market with a proven ROI, especially for STEM courses in the US or Canada.

In today's market, VCs are actively seeking out edu-fintech companies that, while perhaps less attention-grabbing, offer stability and a reliable business model. In 2024 alone, Propelld raised $25 million, Leap Finance raised $35 million, and Eduvanz continues to partner with large NBFCs for co-lending.

Meanwhile, edtech giants are pivoting to hybrid, cutting staff, or raising bridge rounds to stay alive. Why? Because content has become a commodity. The real moat today lies in distribution and financing. The new wave of edu-startups aren’t building schools or courses, they're creating channels to optimize financial flow within the education sector.

There are risks also. Education loans come with default risk, regulatory oversight, and recovery challenges. But the data so far looks promising - most lenders report sub-3% NPAs, and defaults are lower among students pursuing credible, outcome-driven courses.

In many ways, this is India’s answer to Affirm or SoFi - not in consumer credit, but in targeted education lending. And while edtech struggles to reinvent itself, edu-fintech has found the cheat code: stay invisible, but indispensable.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Phir Bhi Dil Hai Hindustani”: Sarvam To Open Source Its Models Under IndiaAI Mission

GenAI startup Sarvam AI is throwing open the doors to its models under the IndiaAI Mission, making them free for all to use.

The government-backed initiative wants to democratise access to powerful LLMs, and Sarvam is leading the charge. Co-founder Vivek Raghavan says it’ll all be shared under permissible licenses - so it's open, but not a free-for-all.

Read more here

“My Time Has Come”: Battling For Survival, Stellaris-Backed BeepKart Shuts Chennai Ops

BeepKart, the used two-wheeler startup backed by Stellaris, has hit the brakes in Chennai - shutting down ops and laying off the entire city team.

Word is, Bengaluru might be next in line as the startup quietly winds down. BeepKart says it's shifting gears to a leaner, asset-light model, but the road ahead looks bumpy.

Read more here

“KitKat Break Banta Hai”: Zepto Cafe Scaling Down Operations Amid Supply Chain Issues

Zepto Cafe is cooling off, the quick food arm of Zepto is scaling down amid supply chain snags and a staffing crunch.

The company’s also tapping the brakes on launching new dark stores. Just two months ago, they’d already hit pause on 44 cafes in North India and it seems the slowdown is spreading.

Read more here

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