In the past 20 years, the average cost of college in the United States has tripled to $35,720 per student per year, with an annual growth rate of 6.8%. Even with all the scholarships available, the rising cost has put thousands of minorities and low-income students at a disadvantage. To address this problem, fintech startup Stride Funding has made it its mission to offer affordable, flexible funding to disadvantaged and underserved students.
Unlike the traditional college loans, Stride offers students innovative alternatives to fixed repayment installment loans. Its income-linked loans, Income Share Agreements (“ISAs”), and Deferred Tuition Agreements (“DTAs”) offer more flexibility and affordability to students, as payments are only required when students are earning a living wage.
Yesterday, Stride announced it closed a $12 million Series A financing round led by Firework Ventures, co-founded by Brigette Lau and Ashley Bittner, with participation from other investors including Juvo Ventures and Graham Holdings — alongside previous investors GSV Ventures, Slow Ventures, and Sinai Ventures. In addition, other industry and academic leaders and serial entrepreneurs also co-invested in the round.
Stride was founded by Tess Michaels in 2018, while a student at Harvard Business School. She was admitted to HBS after graduating from Wharton in 2015, spent two years at Goldman Sachs, and another year in private equity before starting her MBA in fall 2018. Stride is Michaels’ second startup. Before launching Stride, Tess had launched another startup that matched employees with the best opportunities and the skillset.
In a statement, Michaels said: “Stride is powered by the fundamental belief that equitable education financing should be based on students’ potential and opportunity, not their past.” She added, “We help young adults underserved by the traditional credit markets gain access to educational programs that improve their economic and career outcomes.”
Since closing its Seed round, Stride has increased the capital committed to fund students 50-fold to over $50 million, with capital providers such as Silicon Valley Bank seeking to finance hundreds of millions in additional funds. Stride has accomplished this despite the odds — less than 1% of total funds raised by fintechs has gone to female-founded companies. Both Stride’s Seed and Series A rounds were led by women – Deborah Quazzo of GSV Ventures and Brigette Lau of Firework Ventures, respectively.
“We are pleased to back an extraordinary entrepreneur generating impact by realigning EdTech and FinTech,” says Lau. “We view Study Now, Pay Later products as the future of educational funding, as they provide much-needed downside protection to students, while aligning the incentives of schools and investors with student outcomes. Stride is purposefully shaping this space and we’re thrilled to join them in this journey!”
One student proving the value of Stride’s model is Nikki Brooks, who leveraged Stride’s funding options to pay her tuition and expenses towards her Physician Assistant degree. “Stride Funding changed the course of my life,” says Brooks. “I struggled to get access to affordable funding to go to school without a cosigner, but Stride believed in my potential and funded my education. Their team’s personalized support has been invaluable and I’m so excited to play a role in our nation’s healthcare system after graduation.”
Michaels has set her aims higher. “Closing our Series A is a significant milestone, but we are just getting started on our quest to make the $130 billion private student loan market more equitable, flexible, and above all – a runway for economic mobility.”
