Amid the coronavirus pandemic, unemployment in Latin America has risen sharply and school enrollment is expected to fall 10-25 percent, widening the income gap and adding significant barriers to education in a region that was already among the most unequal in the world. At the same time, the demand for computer science skills keeps increasing. There are only 100,000 professionals with the training necessary to fill almost 1 million open tech positions, and the need for high-quality technical education is rising in Latin America.
Henry was founded to challenge the status quo of education in Latin America by making education accessible to anyone. The company offers virtual coding courses in exchange for a small portion of graduates’ future income, also known as an income-sharing agreement (ISA). Once a student completes the coursework, Henry helps them secure a job in the technology sector. There are no upfront costs for taking the course, and students only start making payments once they get a job after graduating. This model aims to tackle inequality in the region, by empowering anyone to have a career in software development, no matter their location, gender, or background.
Following our investment in Pintek back in May, this is our second deal this year in the edtech (education technology) space, as we recognize the need for fintech solutions to make education more accessible for the underserved populations. We see Henry as the perfect example of the next phase of inclusive fintech: startups that are embedding financial services into product offerings to address a critical need.
We are thrilled to join the Henry team in this journey because of their:
Incentive to invest in high-quality education for their students
Henry’s product is designed such that the company and its students are working toward the same goal: optimizing graduates’ income. Similar to Lambda School, another Y Combinator fellow, the company invests in its students’ success. Henry is incentivized to ensure that their curriculum quality and job placement services remain best-in-class as the company scales. Similarly, students are motivated to learn and earn as much as possible, driving them to achieve goals that also support Henry’s revenue and growth. Henry differentiates its curriculum from other bootcamps by offering a live, full-time program (versus self-guided, pre-recorded programs or part-time programs where students aren’t fully focused on the content) and through its practical, “learn by doing” teaching methodology. The company solicits feedback from top local tech companies to ensure that their curriculum prepares students to address employers’ most relevant technical needs.
Highly relevant product during the COVID-19 pandemic
Henry’s product offering is particularly relevant during the COVID-19 pandemic. As companies grapple with the economic effects of the pandemic and are forced to lay off and furlough employees, the demand for re-skilling opportunities like Henry is likely to increase as more people seek new job opportunities. Further, Henry’s courses are entirely remote, and the company invests in helping graduates secure remote jobs abroad, allowing students to learn and work while complying with public health guidelines. Understanding the value of customer retention and the need for the graduates to remain competitive in this market, Henry created a community where former students continue to receive support, both from the company and fellow alumni.
Responsible approach to income-sharing
Henry leverages an income sharing agreement (ISA) model to provide courses to its students at no up-front cost. This innovative way of embedding financial services eliminates the burden that students take on when forced to pay tuition upfront and incur student debt. While we believe these agreements are useful tools for financial inclusion, we also know that, when used without proper guardrails, they can have a negative impact on consumers who end up owing more money than they can afford. Henry’s ISA protects students through a payment cap, so that students never pay more than $4,000 throughout their ISA installments — considerably lower than the price of many other comparable bootcamps. We believe that this cap will ensure that Henry’s ISA structure remains student-friendly and may serve as a positive example to others in the industry.
This is Accion Venture Lab’s first investment in a model like Henry, and we are thrilled to be doing so in this historical moment where investors need to step up and support those companies that are expanding the frontiers of innovation and financial inclusion. Henry was created, as their CEO Martín Borchardt states, to change people’s lives. As an impact fund, nothing is more aligned with our ultimate goal than their mission to create new opportunities for the underserved.