The world of entrepreneurship has witnessed countless success stories, each driven by unique visions and compelling motivations.
Emmanuel Smadja’s story as the Co-Founder and CEO of MPOWER Financing is no exception.
An accidental entrepreneur, Emmanuel’s journey has been defined by resilience, compassion, and a fervent desire to empower international students pursuing higher education abroad.
Alongside co-founder Mike Davis, Smadja has built MPOWER Financing, a revolutionary financial solution for international students.
In this exclusive interview, Emmanuel Smadja shares what led to the start of MPOWER, his vision for the company, and much more.
In your experience, what are some of the essential qualities a successful CEO should possess?
I think the job requires several skills, some of which might seem contradictory. First, there’s a need for undying optimism, bordering on delusion. Startups face ups-and-downs, and CEOs need to guide their team through good times and tough times alike. This requires an ability to see the light at the end of the tunnel, to embrace challenges, and turn these into opportunities. At the same time, there’s a need for constant hunger and dissatisfaction with the status quo; the company can always do better and grow faster.
Separately, CEOs need to be able to articulate an inspiring vision, and share that vision constantly with prospective employees, shareholders, partners, and their board. This aspect is essential to the CEO’s job of “Chief Resource Officer”, meaning ensuring the company has the funding and people talent needed to drive results. Now, beyond the optimism and evangelism a CEO actually needs to be a good manager of the executive team and needs to be able to absorb massive amounts of data in order to stay grounded in the reality of the business. Short of these qualities, the CEO would remain more of a figurehead, president, or evangelist for the company.
What inspired you and your co-founder, Mike Davis, to start MPOWER Financing?
I am an “accidental entrepreneur” in that I was happily on the partner path at the consulting firm McKinsey & Co and never really intended to become an entrepreneur. I was driven to found MPOWER due to my own personal experience as an international student, and a “lightbulb moment” I had about a decade ago.
My experience mirrors that of MPOWER students. I moved to the U.S. as an international student from France to study engineering at the University of Virginia. During my time there, I struggled to pay for my education — eventually earning enough money by tutoring math, physics, computer science, French, and refereeing indoor soccer. But it always bugged me that it was difficult for international students to finance their education abroad.
I later completed an MBA from INSEAD and worked at McKinsey, where I focused on global financial inclusion.
Then, about 10 years ago, a student reached out to me for support, it was really an eye-opening moment for me. He was the first in his family to go to college, had just 3 semesters left to graduate, and was going to drop out for only a small amount of money. After speaking with him I sent him the funds, but I felt pulled in to solve this problem on a larger scale. That’s what motivated me to co-found MPOWER Financing.
When looking for a co-founder, I reached out to my INSEAD classmate Mike Davis. Mike is a serial entrepreneur, who was running three successful startups from an office in Manhattan before he decided to pursue his MBA. His family fled the Iranian revolution and Mike grew up on welfare in Indiana. But he was a sharp student and graduated Purdue University at age 19. To call him an overachiever is an understatement.
As the CEO, what are some of the key challenges that you have faced while building and growing MPOWER Financing, and how have you overcome them?
2020 was a perfect storm for us. Covid created challenges for international students trying to come into North America or head home, while the past U.S. administration was effectively waging war on immigrants. Our team turned into a hotline helping students. Via partnerships, we started offering temporary housing for students stuck in North America, health insurance that would cover Covid, and immigration guidance.
Covid also represented an opportunity for MPOWER. Our credit data had been phenomenal for the first 6 years of our existence, but some loan capital providers objected that we’d never seen a financial shock. Well, March-June 2020 provided just that, and what the data allowed us to show is that MPOWER students performed exceptionally well relative to U.S. private student lenders and other consumer loan providers during financial shocks. In short, not only did we have better credit performance than the market generally, but the performance was also far less volatile during market shocks. This was a critical proof point for our business and yet another arrow in our quiver as we raised over $150 million in equity and venture debt in 2021.
MPOWER Financing works with over 400 top universities across the U.S. and Canada. How do you establish and maintain these partnerships, and what benefits do they bring to the students and universities involved?
The American and Canadian higher education institutions that host MPOWER students benefit both directly and indirectly from the no-cosigner loan model that enables a larger number and diversity of aspiring students to study abroad, while also allowing universities to prosper and internationalize.
MPOWER students come from over 160 countries, and about 80% are from the Global South. Over 90% of our students say that an MPOWER loan was imperative to their ability to complete their education. As a result, MPOWER loans have not only helped to fulfill these students’ educational dreams, but our financing has enabled these institutions to diversify their international student body and to meet their diversity, equity, and inclusion goals — not to mention their financial and enrollment goals.
International students contribute in immeasurable ways to the internationalization and global appeal of American and Canadian campuses. Their presence and perspectives are especially valuable to those domestic students who might not have the opportunity to study or travel abroad, and for whom international students offer a window into other worlds and cultures. Increasing access to international students who want to study in the U.S. or Canada is therefore beneficial to both those students and their domestic peers.
The recent $150 million finance deal with Goldman Sachs is a significant milestone for MPOWER Financing. How do you plan to utilize this funding to further support and expand your services for international students?
In May, we announced that MPOWER raised a $150 million dollar warehouse financing facility with Goldman Sachs. We are thrilled that Goldman Sachs is supporting the MPOWER team as we contribute to the important mission of making higher education and socioeconomic mobility accessible to the millions of international students in North America.
The funding will be used to expand MPOWER’s rapidly growing portfolio of student loans issued to international and DACA students across the U.S. and Canada. Both countries saw record levels of international enrolment in 2022 and look poised to exceed this in 2023. Our partnerships with leading financial services firms like Goldman Sachs, Deutsche Bank, and others ensures that more deserving students than ever are able to fulfill their educational dreams.
Looking ahead, what is your vision for MPOWER? What are you most excited about?
Higher education is key to socioeconomic mobility but, unfortunately, millions of students struggle to get into or through school due to financial constraints. At MPOWER Financing, our mission is to break down the financial barriers to education.
It is overwhelming, but incredibly satisfying, to see your mission come to fruition and to help support the educational dreams of so many promising students from around the world. In feedback from our students, the word that stands out is “dream.” Almost daily, our students tell us that MPOWER makes their dreams come true by enabling their educational pursuits. This is what I find most exciting about my job and about working at MPOWER. As one MPOWER student recently wrote, “Many brilliant students can see their dreams of studying abroad become a reality thanks to [MPOWER’s] support.”
Our long-term vision is to be a one-stop shop for the global diaspora: this includes educational loans, but also a host of other products and services that students and migrants need to set themselves up for success in their adopted countries.
MPOWER graduates are contributing significantly to the economy and civil society: they’re advocating for causes, co-founding companies, registering patents, and serving as elected officials. As our world grapples with wars, climate change, and the challenges of an aging population, we’re honored to have a small part to play in alleviating some of these challenges and fostering a more diverse, equitable world where the brightest minds are able to reach their full potential.
