Bengaluru: Payment services provider Paytm (One97 Communications Ltd) has bought education technology start-up Edukart, backed by cricketer Yuvraj Singh and Paytm founder Vijay Shekhar Sharma, after it failed to raise new funds, said three people aware of the development.
The purchase, whose value wasn’t disclosed, is a so-called acquihire—or buying out a company primarily for the skills and expertise of its staff.
Ishan Gupta, founder and chief executive of Earth Education Valley Pvt. Ltd, which runs Edukart, has joined Paytm as vice-president of business and is looking after Paytm’s seller financing team, while the 50-odd employees of Edukart will handle various responsibilities around seller services, the people cited above said on the condition of anonymity.
“While the team has been absorbed into Paytm, investors are also looking for a buyer for Edukart’s business. Finding a buyer is difficult in the current scenario, where very few edutech start-ups barring the likes of Simplilearn or Byju’s have managed to scale up,” said one of the three people cited above.
Paytm confirmed the development.
Edukart was founded in 2011 by Ishan Gupta, a management graduate from Stanford University, and Mayank Gupta, an alumnus of the Indian Institute of Management, Kozhikode. It was a marketplace that aggregated K 12, degree, diploma and certificate courses, besides coaching for entrance examinations.
Mayank Gupta quit the firm in December 2014 and joined online electronics marketplace Zopper.
According to the company’s website, Edukart aggregated courses offered by other education technology start-ups such as Byju’s, Simplilearn, Edureka and Toppr, coaching institutes such as Aakash Institute, Vidyamandir Classes and Bharati Vidyapeeth Deemed University, Annamalai University, National Institute of Management and Technology and University of Mysore, among others.
The company raised $2 million in three rounds from Kima Ventures; AKM Systems; Stanford Alumni; Paytm’s Sharma; Vibhor Sharma, former partner at SAIF Partners; Manish Khetrapal, founder of WaterBridge Ventures; Yuvraj Singh’s YouWeCan Ventures; early-stage fund 500 Startups; angel investors Arihant Patni and Amit Patni; and United Finsec, the family office of hologram maker Holostik Group.
At the time of its last fund raising in June 2015, chief executive Ishan Gupta had said in an interview that the firm was targeting sales of over $100 million for its course providers, and planned to enrol more than 100,000 students annually.
Before founding Edukart, Gupta worked with One97 Communications, Paytm’s parent firm, between October 2009 and March 2011.
Since 2015, Paytm has either invested in or bought at least five firms. It has bought consumer behaviour prediction and recommendation platform Shifu and home services provider Near.in, apart from investing in online auto-rickshaw aggregator Jugnoo, logistics data start-up LogiNext and deal discovery app Little.
According to industry experts, while edutech start-ups may boast of a large user base, they might struggle to make users pay for the content.
While industry experts peg the number of edutech start-ups in India at more than 400, not many, barring Simplilearn and Byju’s, have been able to attract ample investor interest.
Venture capital investment in the country plummeted 58% in the June quarter from the previous three-month period, according to a report by consulting firm KPMG and CB Insights. Venture capital firms ploughed $583 million into India in April-June, down from $1.4 billion in January-March, said the report.