School fees app that eases cashflow stress for parents raises $9.4m

A FinTech school fees app that allows parents in the Mena region to manage their cash flow more effectively has raised $9.4 million in a seed round that was oversubscribed.

The app, called zenda, seeks to address “pain points” by allowing families to monitor when school fees are due and make payments immediately or through a buy now, pay later (BNPL) option, the company said yesterday. It offers rewards to parents who pay on time.

“In today’s digital world, we seek low friction and immediacy,” said Raman Thiagarajan, chief executive and founder of the start-up. “Why should that not be the case for fee payments? Part of the ecosystem still runs on cash or cheque, with no convenient option to pay later. Zenda schools are witnessing a systematic increase in their collections.”

The BNPL business model, which allows consumers to make online purchases instantly and spread their payments over a series of interest-free instalments, has boomed since the onset of the Covid-19 pandemic.

The BNPL industry is expected to grow by 10 to 15 times by 2025 worldwide, topping $1 trillion in annual gross merchandise volume by some estimates, a report by New York data research consultancy CB Insights said. There are a number of BNPL players vying for a share of the Middle East market, including Spotii, Postpay, Cashew, Tabby and Tamara.

Regional and global investors such as Riyadh-focused venture capital fund STV, Cotu, Global Founders Capital and UAE investment platform VentureSouq participated in zenda’s funding round.

A report published by the Knowledge and Human Development Authority in November found that more than 40 per cent of pupils at private schools in Dubai pay less than Dh18,000 ($4,900) in fees annually.

Only 9 per cent of parents pay more than Dh75,000 while another 22 per cent pay between Dh18,000 and Dh35,000, data from the KHDA shows.