“Education is the most powerful tool to break the cycle of poverty,” believes Steve Hardgrave, a Southern California native whose unconventional journey brought him to India. For over 13 years, Steve has been dedicated to transforming affordable education in the country. Together with Brajesh Mishra, who has always been passionate about making education more accessible, he co-founded Varthana Finance, a Bengaluru-based NBFC that provides crucial financial support to affordable private schools, empowering them to thrive and make a lasting impact.
A Journey Fueled by Passion
Growing up in the US, Steve, like many, perceived private schools as exclusive institutions beyond the reach of most families. His perspective changed during his tenure at Atlanta-based Grey Ghost Ventures in 2007. As he traveled the world to monitor microfinance projects, Steve had an eye-opening experience during conversations with women benefiting from these initiatives. “I asked them where they sent their children to school. When they said ‘private schools’, I was blown away,” Steve recalls. These interactions unveiled the critical demand for affordable private schools, lighting a spark that would eventually lead to the founding of Varthana.
Brajesh’s journey began at ICICI Bank, where he initially made his mark in its Rural, Microbanking, and Agri-business division in Mumbai. During his stint at ICICI Bank, he had the opportunity to meet inspiring people from all over the world who were making a real difference in rural and farming communities. One such meeting introduced him to Steve Hardgrave and the team at Grey Ghost Ventures, who were exploring the idea of financing schools in India. “The idea was so compelling and the team was so passionate about the work that there was no question of saying no,” Brajesh reflects, looking back. In September 2008, he joined the Indian School Finance Company (ISFC) and moved to Hyderabad, driven by a shared vision of creating meaningful change in education.
At ISFC, the team saw success, turning profitable and addressing the unmet needs of schools across the country. However, challenges like funding gaps and differing visions prompted Steve and Brajesh to take a bold step.
“We realized the power of the model and the impact we were creating. By 2011, we knew we had to chart our own path,” says Brajesh.
Building a Legacy
In 2012, after persistent efforts and unwavering faith, they acquired their own NBFC license and launched Varthana Finance in Bengaluru. “It wasn’t just about loans; it was about transforming dreams into reality,” Steve reflects. With a modest Rs 7 crore raised from friends and family, the team made its first loan in January 2013. Varthana became a source of hope for schools needing funds to expand classrooms, upgrade facilities, and provide better education to underserved communities.
In March 2024, Varthana came full circle, acquiring ISFC’s school loan portfolio for Rs 126 crore. This milestone signified not just growth but the fulfillment of a shared dream.
A Message of Hope
“Education is the foundation of opportunity,” Brajesh emphasizes. Together, Steve and Brajesh have proven that with vision, resilience, and purpose, even the most audacious dreams can be realized. Through Varthana, they continue to empower schools, enabling countless children to access quality education and brighter futures.
Vision and Mission
Varthana’s vision is to close the gap between the ambitions of private schools and their financial challenges.
As Steve notes, “Varthana upholds integrity, serving others, and unlocking potential,” driving their commitment to educational improvement.
Aligned with this vision, Varthana’s mission is to support affordable private schools with vital financial resources. Brajesh explains, “India’s growing youth need skill-oriented education, but the country lags behind.” Varthana addresses this by providing loans to schools that struggle to secure traditional financing. “Medium and small schools often face financial hurdles, while larger schools are better capitalized,” Brajesh adds. By offering upfront funding, Varthana enables these schools to expand and enhance their offerings.
Through its mission, Varthana not only supports educational institutions but also fosters a meaningful work environment for its employees. As Brajesh says, “It’s heartening to offer a great work environment while bridging the educational gap.” Varthana’s efforts embody their vision, making a significant impact on education in India.
Innovation
Varthana approaches innovation in education financing with a focus on supporting the unique needs of affordable private schools. Steve explains, “Affordable private schools often have innovative teaching methods that work well in their local communities.” Varthana encourages these schools by offering tailored financial solutions, such as loans for infrastructure development, technology upgrades, and capacity building.
A successful innovation at Varthana is their flexible repayment options, designed to accommodate the financial constraints of these schools. Steve notes, “We provide flexible repayment options to help schools manage their finances while investing in their growth.” This approach ensures that schools can continue to enhance their educational offerings without financial strain.
To stay ahead in a dynamic market, Varthana continually adapts its financial products and services. By understanding the evolving needs of its customers and the challenges they face, Varthana remains at the forefront of education financing. Steve shares, “Our efforts stem from the belief that we are here to make a difference in the education sector,” aiming to improve learning outcomes and support the growth of schools serving their communities.
Challenges and Overcoming Obstacles
Starting and growing Varthana presented several challenges, especially during the COVID-19 pandemic. “India faced one of the longest school closures globally,” says Steve. This period was tough for everyone, but it hit low-income families the hardest, as they struggled to adapt to remote learning. “Schools were the first to shut and the last to open,” Steve adds. With this sudden shift, many families had to invest in smartphones and internet data, which they could barely afford due to the loss of income during the pandemic. Addressing this digital divide became a priority for Varthana.
To overcome this challenge, Steve and his team at Varthana launched the Unlock School Program, which focused on bridging the gap created by digital learning. “We aimed to provide continued learning opportunities,” says Steve. They did this by offering printed remedial materials and supplementary videos in subjects like Maths and English for students in grades 1-8. This initiative was a game-changer, reaching close to 1,000 schools across India and impacting around 300,000 students.
Understanding that not all teachers were proficient with technology, Varthana also developed a teacher certification program. This program helped teachers adapt to online teaching, focusing on essential areas like lesson planning and assessment strategies. “Our goal was to make sure no student was left behind,” Steve explains. By being proactive and innovative, Varthana managed to navigate these tough times and support both students and educators in their journey.
Experience and Learning
One of the most rewarding experiences for Varthana has been understanding the vast and diverse education sector in India. With 450 million youth under the age of 19, India has a growing need for quality education. As prosperity rises, more parents are turning to private schools, expecting better education for their children. This growing demand presents both challenges and opportunities for Varthana.
The journey, especially during the COVID-19 pandemic, has taught Varthana many valuable lessons. Schools, particularly those serving low-income communities, faced significant setbacks. As schools closed, many parents could not afford to pay fees, leading to financial troubles for these institutions. Varthana also faced challenges, including increased loan defaults and a downgrade by their rating agency.
These experiences shaped Varthana’s approach, focusing on resilience and adaptability. Understanding the hardships of low-income schools and families, Varthana developed targeted programs like the Unlock School initiative to bridge gaps in education. The goal became clearer: to support schools and students through every challenge. This commitment continues to guide Varthana as it serves a growing and evolving education sector.
Success Stories and Impact
- Varthana has made a notable impact on the education landscape in India. A prime example is Saraswati Vidya Mandir School in Haryana, led by Devraj Sharma. Thanks to Varthana’s support, the school transformed from a modest setup with 11 classrooms to a vibrant educational hub with 28 classrooms.
Devraj Sharma reflects on this journey, “The loan from Varthana was a turning point for us. It allowed us to expand and improve our facilities, making a real difference for our students.” This support has enabled the school to grow its student body from 116 to 650, and nearly 90% of students now excel in their board exams.
Devraj shares, “Our progress is a testament to the impact of Varthana’s support. What once seemed like an impossible dream has become a reality.” The expansion and improvement in educational outcomes underscore how Varthana’s partnership has helped the school provide better opportunities and a stronger learning environment for its students.
- Nandkumar Chavan left his job in Mumbai to start Sharda English Medium School in Kajgaon, Nashik, driven by a deep desire to uplift his village through quality education. Starting with just 160 students, his school now has 1,400, a testament to his dedication and the trust he built within the community.
Varthana became a key partner in this journey. “Varthana felt like family, helping us expand from five to 14 classrooms,” Nandkumar reflects. Their support enabled the construction of two new floors, providing vital space for young learners to thrive.
Grateful for the partnership, Nandkumar says, “Varthana turned our vision into reality.” His story shows how passion, community, and the right support can create meaningful change, proving that education can indeed transform lives.
- Jhansi Rani, the force behind New St. Maria High School in Hyderabad is reshaping education in her community. Starting with just eight students in 1998, her school now empowers hundreds, focusing on affordable, experiential learning and strong parent involvement.
During the pandemic, Jhansi faced immense financial challenges but stood firm. “Varthana was a lifeline,” she shares. “Their financial aid and academic resources like Unlock Bridge helped us through tough times.” Varthana’s support enabled her to sustain teachers, conduct door-to-door learning, and continue quality education.
“Varthana stood by us,” Jhansi says. With their help, the school has not only survived but thrived, aiming to enroll over 2,000 students by 2025. Her story is a testament to how determination, paired with the right support, can turn aspirations into impactful realities.
Looking Forward
With strong support from global impact investors, Varthana continues to make significant progress in its mission to improve affordable education in India. The company successfully raised $55 million in a Series C funding round led by ChrysCapital in 2018, with additional participation from Omidyar Network and Kaizenvest, both known for backing leading edtech companies such as BYJU’S, Vedantu, and upGrad. This year, Varthana secured $14 million from Blue Earth Capital in January and $10 million from BlueOrchard Finance in April 2024.
In December 2024, Varthana achieved another milestone by raising $15 million (₹120 Crore) from BlueOrchard Finance Ltd, a global leader in impact investing. This funding is crucial in enabling affordable private schools to develop their infrastructure, enhance the standards of teaching, and better learning environments, particularly in Tier 2 and 3 cities.
Varthana is now focusing on education loans in addition to working with primary and secondary schools. It will focus on students who have completed their 10th and 12th grades and are eligible for college or vocational training. This is because lowering financial barriers guarantees a decline in dropout rates while raising students’ earning potential and prospects for the future.
Looking ahead, Varthana plans to raise significant equity, targeting Rs 300 to 350 crore by the next financial year. The founders will focus more on Tier 3 and 4 cities, aiming to bring affordable education to underprivileged children in these areas. They believe these children have long been deprived of quality opportunities, and it’s time to change that.
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