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Digbijay.Mishra@timesgroup.com
Bengaluru: The amount of money invested in India’s education technology startups has increased nearly four times to $1.5 billion in the first nine months of 2020 as compared to $409 million in entire 2019, according to data from Venture Intelligence. The development signifies the fast emergence of the edtech segment as a favourite among global venture capital and private equity firms.
While Byju’s and Unacademy have raised the most money from investors like SoftBank, Tiger Global, Silver Lake and General Atlantic, more action is expected to continue as adoption of technology in the sector zooms due to the Covid-19 pandemic. For instance, the Ronnie Screwvala-promoted online higher education & skilling startup Upgrad is looking to raise $100 million. Similarly, Teachmint — which lets private tutors conduct online classes with their students — is closing a new round of $8 million from Lightspeed, said sources briefed on the matter.
This comes as investors feel that edtech startups don’t only have a big market in India with increasing home learning, but can also serve global markets as many companies start getting significant revenues from overseas.
Upgrad is venturing out to raise external capital for the first time since it started operations in 2015 and has appointed Credit Suisse for the fund-raise, three sources confirmed the development. Upgrad’s need for external capital is also fuelled by its plan to enter new segments like overseas education as well as make local acquisitions.
“We are seeing strong traction from international markets and there are potential merger and acquisition options in our adjacent businesses. We also have a strong pool of students looking at overseas studies,” said Mayank Kumar, co-founder and MD, Upgrad. According to him, the firm is looking at a Rs 150-crore revenue for the current quarter, which should double to Rs 300 crore in the January-March quarter. It recorded a revenue of around Rs 230 crore in the previous fiscal year.
For Teachmint, which raised its first round of capital from Snapdeal founders’ Titan Capital and Better Capital last month, Lightspeed’s investment marks the wide array of opportunities still available to be tapped by early stage startups. “Small individual tutors or local brands of education will be leading their own respective brand in the localities through a platform like ours. The common usage is a tier-2 or -3 teacher, mostly tutoring local students in a vernacular way, which clicks with those students,” said Teachmint co-founder and CEO Mihir Gupta. He declined to comment on the new fund-raise.
Companies in edtech have also been able to build an international revenue base, and some are expected to turn profitable. For instance, code-learning startup WhiteHat Jr gets the majority of its revenues from overseas. It was acquired for about $300 million in cash earlier this year by Byju’s, one of the world’s most-valued edtech startups at $11 billion.
Eruditus, which provides executive education courses in collaboration with top universities like MIT and Harvard, gets 80% of its revenues from overseas. The company raised $113 million in funding from South Africa’s Prosus Ventures and PE firm Leeds Illuminate, besides Facebook co-founder Mark Zuckerberg’s philanthropy firm Chan Zuckerberg Initiative last month and was valued at $800 million. While Byju’s is already profitable, Eruditus expects to be in the current financial year.
The rush of funding into the market has raised questions about frothiness of valuations, but investors feel that in the longer term, these companies have a big potential given the size of the market. “Valuations are a function of growth, profitability and depth of market — edtech companies have clearly demonstrated the first two, and size of market in most cases is not an issue in India. If these companies grow 2-4x in 12 months, then they will look cheap,” said Rajat Agarwal, MD at Matrix Partners India, which has backed edtech startups like Pesto and Testbook.
Bengaluru: The amount of money invested in India’s education technology startups has increased nearly four times to $1.5 billion in the first nine months of 2020 as compared to $409 million in entire 2019, according to data from Venture Intelligence. The development signifies the fast emergence of the edtech segment as a favourite among global venture capital and private equity firms.
While Byju’s and Unacademy have raised the most money from investors like SoftBank, Tiger Global, Silver Lake and General Atlantic, more action is expected to continue as adoption of technology in the sector zooms due to the Covid-19 pandemic. For instance, the Ronnie Screwvala-promoted online higher education & skilling startup Upgrad is looking to raise $100 million. Similarly, Teachmint — which lets private tutors conduct online classes with their students — is closing a new round of $8 million from Lightspeed, said sources briefed on the matter.
This comes as investors feel that edtech startups don’t only have a big market in India with increasing home learning, but can also serve global markets as many companies start getting significant revenues from overseas.
Upgrad is venturing out to raise external capital for the first time since it started operations in 2015 and has appointed Credit Suisse for the fund-raise, three sources confirmed the development. Upgrad’s need for external capital is also fuelled by its plan to enter new segments like overseas education as well as make local acquisitions.
“We are seeing strong traction from international markets and there are potential merger and acquisition options in our adjacent businesses. We also have a strong pool of students looking at overseas studies,” said Mayank Kumar, co-founder and MD, Upgrad. According to him, the firm is looking at a Rs 150-crore revenue for the current quarter, which should double to Rs 300 crore in the January-March quarter. It recorded a revenue of around Rs 230 crore in the previous fiscal year.
For Teachmint, which raised its first round of capital from Snapdeal founders’ Titan Capital and Better Capital last month, Lightspeed’s investment marks the wide array of opportunities still available to be tapped by early stage startups. “Small individual tutors or local brands of education will be leading their own respective brand in the localities through a platform like ours. The common usage is a tier-2 or -3 teacher, mostly tutoring local students in a vernacular way, which clicks with those students,” said Teachmint co-founder and CEO Mihir Gupta. He declined to comment on the new fund-raise.
Companies in edtech have also been able to build an international revenue base, and some are expected to turn profitable. For instance, code-learning startup WhiteHat Jr gets the majority of its revenues from overseas. It was acquired for about $300 million in cash earlier this year by Byju’s, one of the world’s most-valued edtech startups at $11 billion.
Eruditus, which provides executive education courses in collaboration with top universities like MIT and Harvard, gets 80% of its revenues from overseas. The company raised $113 million in funding from South Africa’s Prosus Ventures and PE firm Leeds Illuminate, besides Facebook co-founder Mark Zuckerberg’s philanthropy firm Chan Zuckerberg Initiative last month and was valued at $800 million. While Byju’s is already profitable, Eruditus expects to be in the current financial year.
The rush of funding into the market has raised questions about frothiness of valuations, but investors feel that in the longer term, these companies have a big potential given the size of the market. “Valuations are a function of growth, profitability and depth of market — edtech companies have clearly demonstrated the first two, and size of market in most cases is not an issue in India. If these companies grow 2-4x in 12 months, then they will look cheap,” said Rajat Agarwal, MD at Matrix Partners India, which has backed edtech startups like Pesto and Testbook.
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