- Prab: Tell us a little about your company today.
Tonio: Vemo Education is transforming the way Americans pay for postsecondary education and is helping put an end to the student debt trap. We’re pioneering the use of income share agreements (ISA) – a socially responsible alternative to high cost, burdensome student loans.
- Prab: What is the hair on fire problem you address? How did you discover this problem and why did you tackle it?
Tonio: We’re tackling the student debt trap and college affordability. I’ve spent over a decade working in higher education finance law and have grappled with the enormous amount of debt that Americans have to incur just to get to college. Too many people under-invest in their higher education or forego college completely because they’re loan averse. It isn’t right, and it isn’t a socially sustainable model if we want every American to have a shot at opportunity.
- Prab: What are the important trends that will shake up this industry? What will the industry look like in 5 to 10 years?
Tonio: The rising cost of college and the lack of alignment between outcomes for students and the increasing student debt load are going to force stakeholders to evolve and align value with outcomes.
- Prab: How crowded is the space? What’s your competitive advantage behind your product or service that you believe makes it a winner?
Tonio: Vemo Education is the market leader in ISAs. We are technical experts on the design, implementation, and servicing of ISAs and are driven by a mission to align incentives in higher education financing so that students only pay when they succeed. We’re 10x our nearest competitor and are rapidly growing month over month.
- Prab: Who are your customers and how do you make money?
Tonio: Our customers are educational institutions and their students. Educational institutions that want to signal to their students that they have skin in the game and are aligned with the success of their graduates partner with Vemo to provide ISAs.
- Prab: How do you attract customers, and how well has it gone? How did you acquire your first customer?
Tonio: Educational institutions partner with us because they want to signal that they believe in the value of their education and the outcome they’ll provide to their graduates. It’s a powerful message for a college to tell a student, “we’re aligned with your success.”
- Prab: Tell us about raising capital – have you raised? What was the experience like? What did you learn?
Tonio: We just finished raising $7.4m in seed equity. DC-area investors NextGen Venture Partners and Route 66 Ventures have been great partners for us and funded a significant amount of the round. People are starting to see that the current debt financing model for postsecondary education isn’t sustainable and that it shuts out too many Americans from the economic mobility and opportunity they deserve.
- Prab: Tell us about you, why are you the perfect founder?
Tonio: I’m the son of a college financial aid administrator who cares deeply about helping Americans unlock their potential by investing in their postsecondary education. And my cofounders – Renée Mang, Bill Brosseau, and Jeff Weinstein – have complimentary backgrounds and expertise.
- Prab: What would be your company’s mascot?
Tonio: Cap n’gown.
It’s no secret that the cost of a college education in the United States has soared over the last several decades. As of September 2017, about 44 million Americans collectively owe over $1.45 trillion in student loan debt. The need to create more affordable methods and plans for students pursuing higher education has never been greater, and this is where Vemo Education steps in.
Founded in August 2015, Vemo designs and implements income-based financing programs that more effectively use institutional resources. They are the market leader in Income Share Agreements, through which students can have their full tuitions paid for, in exchange for surrendering a percentage of their post-graduation income. The agreements eschew the burdensome interest that comes with traditional loans, and also allow for a greater variety of investors to contribute to student tuition. It’s a novel approach to solving the student debt crisis in this country. Techweek’s Head of Media, Prab Kumar, sat down with the CEO of Vemo Education, Tonio DeSorrento, to learn more.