Deal focus: Tapping a soft spot for Asian VCs

Last September, Leap Finance, a company that facilitates college loans for Indian students looking to study overseas, raised USD 55m. Two months later, CollegeDekho, India’s largest global admissions and university-services platform, secured USD 35m. There’s a trend here that says as much about the investors themselves as rising demand for out-of-class help.

Not that long ago, VC investment in Asia was largely directed by US-based decision-makers who never had to jump through the hoops of an international college application. But as the region’s start-up ecosystems come of age with homegrown investment talent, so has VC industry empathy for the 5.2m Asians who put themselves forward for places at Western universities every year.

The latest beneficiary of this theme is Singapore’s Cialfo, which helps connect high school students, their counsellors, and families with more than 1,000 colleges. Square Peg Capital has led a USD 40m Series B round with support from Seek Investments, SIG Global, DLF Venture, January Capital, and Vulcan Capital.

“A lot of the VCs that invested in Cialfo fit that profile or they’re old enough that their children are now going through that, and they’re using Cialfo in their schools,” Rohan Pasari, co-founder and CEO of Cialfo (pictured), said.

“Vulcan is led by Tommy Teo, who is Singaporean, went to the University of Michigan, and came back to Asia. The reason he invested is because he could feel the amount of anxiety you go through to apply and get settled in.”

Addressing a need

Cialfo started out in 2012 as a traditional international student consultancy with a B2C model, which proved difficult to scale. By switching to B2B, with a focus on supporting schools and their counsellors, Pasari hopes to tap a market of some 100m students globally.

The targeted problem is an entrenched social trend that has seen little to no solutioning to date. About 7m students apply to universities outside their home country yearly, three-quarters of whom are Asians going West. Families are in a position of trying to commit USD 250,000 over a four-year period with only scattered information and support from biased agents.

“That’s what happened to me,” said Pasari, who left India to study in Singapore. “If you look at why that is, in Asia, the focus for schools was really about how well students scored in their national exams. However, that metric has changed. Parents are looking at success based on how many students get into reputable universities. High schools need to have that service now.”

Cialfo charges both high schools and universities a fee, typically a three-year subscription, to use its platform, which provides students with all the necessary information plus a one-click application function. In instances where a high school does not have counsellor services, Cialfo has 10 in-house staff to fill that role. It is a low-touch service, with each counsellor covering some 200-300 students.

The Series B proceeds will be used to expand from a total staff of about 170 to 350-400 by the end of the year. Singapore and India will remain the largest offices, but the China and US teams are expected to double to about 20 and 30 staff, respectively. There are also plans to set up shop in the UK. Canada is serviced from the US, while Australia is serviced from Singapore.

Most of the capital will be applied to acquiring less established competitors and consolidating the niche. Cialfo wants to double the university network to 2,000 but will grow no further; the idea is to offer deeper services to the most popular schools and not spread the business too thin.

There are also plans to enter financial services but no desire to start a loan book. Cialfo is said to have held talks with several student loan players about potential partnerships. These efforts will leverage a backdrop of increasing decentralised and digitised student-school relations.

“With COVID and the disruption of learning, there has been a huge drop in satisfaction of students in how they interact with teachers and schools, both at high school and university,” Pasari said. “Schools have realised they are not equipped to deal with or engage with these students without technology, and they know it’s not a temporary fix.”

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• Topics
• Southeast Asia
• Consumer
• Technology
• Early-stage
• Singapore
• Square Peg Capital
• SIG
• Vulcan Capital
• Education
• TMT