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While working from on nexquare, a socially-focused edtech startup that leveraged data science in education to build tech and data products, Raman Thiagarajan and Haseeb Ahmed realised that during the pandemic, many of their customers faced challenges regarding collections and receivables—ie, recovering the debt owed.

“During the pandemic, we spoke with multiple institutions, banks, credit providers, and other players, and realised that there was an issue. While there were several payment gateways and banks in the market, their offerings were generic and did not solve the core issues for the institution,” adds Raman.

To address this problem, the McKinsey and Company colleagues launched their second venture–zenda–in June 2021. With headquarters in Dubai, the startup is registered in Kochi, India with offices in Bangaluru, Kochi and Delhi for now.

What it solves for

zenda aims to solve two major challenges faced by parents and institutions.

Firstly, fee payments in schools (including nurseries, K-12, colleges, coaching/training centres, tertiary education etc) are mostly done offline, and even in institutes that allow digital payments, the process is cumbersome and expensive.

Secondly, the majority of families are monthly earners, however, many schools take fee payments at the start of the term or bi-annually, resulting in cash flow stress for parents and collection delays for schools.

During an interaction with YourStory, Raman, CEO and Co-founder at zenda, states, “We hear many stories from parents about the stress they go through when, at times, they do not have funds readily available to meet the due dates/deadlines, and access to help for credit is still old-fashioned and onerous. Agnostic of economic strata and culture, every parent obsesses about the future of their child/children.”

zenda allows families to keep a track of their dues and make payments through a multitude of pay-now and pay-later options, and unlock rewards for paying on time.

The fintech startup’s core product is an app targeted toward parents. Parents can use the app to make fee payments in full (through multiple digital payment modes—from cards to UPI and bank transfers) or they can pay it in parts (pay-later).

Under the pay-later option, institutes get the money upfront and the app allows parents to pay it in convenient installments.

Talking about the platform, Raman explains, “zenda has tied up with different credit providers, and it gives parents an embedded finance experience once they’re on the app. Access to loan is a seamless three-step process, and within five minutes (in most cases), credit would be disbursed and the school will receive the money.”

zenda integrates with schools through its proprietary data model and APIs (Application Programming Interface), and eliminates last-mile reconciliation challenges and delays.

The team

With a team of more than 40 members—two-thirds of whom are in India, the startup has scaled rapidly, operating out of Bengaluru, Kochi, Delhi, and Dubai.

Raman has over 20+ years of experience, and was a partner at McKinsey and Company, where he led the firm’s Financial Services Practice in the MENA (Middle East and North Africa) region. He has been an active participant in the startup ecosystem for over the past 10 years, and has been an entrepreneur over the past 5+ years.

Haseeb was a senior associate at McKinsey and Company, and actively worked in the areas of analytics/decision science, serving clients across the world.

zenda is the founders’ second startup. Raman mentioned that their previous venture is running profitably and its solutions are actively used across 10+ countries.

Market size and traction

With approximately $70 billion processed annually in fee payments to private educational institutions in India, $37 billion in the GCC (Gulf Cooperation Council), and $34 billion in the rest of the Middle East and Africa, the market is sizable yet largely untapped.

Speaking about competitions, Raman adds, “There are players providing services in specific areas like

in payments, and there are multiple PGs and banks offering payment rails; but these are usually generic and not contextualised to parents/education institutions’ unique needs. In lending, there are players offering 0 percent EMI products with traditional lending approaches. Banks and NBFCs find credit in this sector attractive and stable and usually focus on infrastructure or institutional lending.”

Speaking about the startup’s business model, Raman says, “We are a financial service provider, and earn margins based on the transactions that take place through our app. We make revenue from the payment and installme nt transactions.

We work with lenders, NBFCs and BNPL providers, who provide the credit. Interest and pricing is assessed by them based on criteria like lending history, volume, tenor etc.”

Without disclosing its revenue, Raman mentions that since its launch, zenda’s users have increased 20 times, with the app reaching over $100 million in annual contracted payment volumes by Q4 2021, across the UAE and India.

Raman, without mentioning the current numbers, claims to have a strong pipeline of 1,000+ institutions, which they expect to be going live in the coming months.

Funding and the way ahead

Bootstrapped since inception, the Dubai-headquartered startup with secured a $9.4 million oversubscribed seed round in April 2022, with participation from STV, COTU, Global Founders Capital, and VentureSouq.

The startup plans to use the capital for product development and market expansion in India.

zenda is eyeing greater growth this year as it accelerates its expansion beyond the UAE using the fresh funding which will also support refinement of its product.

“Funds will be mainly used for market expansion in our first two core markets, the UAE and India; and later into other markets across the region and beyond. Our focus is on delivering outstanding experiences to parents and end-users, and we intend to put in significant effort in building those experiences and product enhancements/improvements. We will continue growing our tech and execution teams over the next quarters both in Dubai and in India,” adds Raman.

In the long term, zenda envisions going beyond school fee payment and encompassing other personal financial management aspects.

“Our mission is to help families thrive. We aim to make it easier for families to manage their money, and to enable their financial wellness. We see a need for family-centric products that are simple and collaborative,” quotes Raman.