Bengaluru: With its mammoth $540-million funding at a valuation of $3.6 billion, Byju’s has entered the top tier of the club of Indian unicorns—startups valued at $1 billion and over—becoming the fourth-most valued startup in the country. In an interview on Monday, Byju’s founder and chief executive Byju Raveendran, a newly minted billionaire, spoke about why Byju’s valuation has seen a jump, how it plans to deploy the fresh capital and whether the company will go for an IPO in a few years. Edited excerpts:
When you initially started the funding process early this year, you were looking to raise much less, at a lower valuation. What’s changed since then?
Money coming in is obviously a function of the valuation. Because the business has almost doubled in the last six months, naturally the valuation went up. The valuation growth is not because there were a lot of investors wanting to come on board—it’s mostly to do with the business growth. One thing we’ve always done is that we’ve raised money at the right value, always based on some multiple to our revenue. The valuation growth that you see over the last 13-16 months, that’s proportionate to the business growth. Also, the fact that on a larger base we’re growing faster, maybe there’s some premium. Previous three years we’ve been growing at 100% each. This year, we’re growing at 3X. We’ll end the year at ₹ 1,400-1,500 crore, up from ₹ 500 crore last year. All the other product numbers are also growing fast. We’ve completed one more renewal cycle—these are metrics that we closely track and obviously investors also track that, not just revenue growth. The model is also profitable.
You’ve witnessed a fair amount of investor demand. How do you pick the investors you want to work with?
It’s important to have a diverse investor profile. It’s not that (Naspers and CPPIB) were the only two investors to qualify for (the fundraise), it’s also based on things like who had the flexibility in terms of their minimum cheque-size requirement, etc. Some of them have larger cheque-size requirement, which we obviously would not be able to do. In all our previous fundraises, we only diluted to the extent that was required. That’s why as promoters, we still hold a substantial part of the company. Why we also have a diverse set of investors is also because we’re planning to do this for a very long term. When we look at future markets, some of them will be potential partners in those markets.
How much stake does the promoter group still retain in Byju’s?
We still have close to 40% ownership.
Which future markets are you looking at outside India?
We want to look at markets where a growing percentage wants to learn in English, where English is becoming aspirational the way it became in India 10-15 years ago. We are not selecting (investment) partners, thinking that we’ll do business in their markets after a few years. If we decide to enter a certain market, then a certain partner may be useful. We don’t do it the other way round. But as of now, we don’t know which markets we will enter in the future.
You still have plenty of capital in the bank. Why did you choose to raise such a large round? How do you plan to deploy it?
Sometimes a large round happens due to the aspiration of creating one or two big markets. India will be a very large market, our primary market—that’s a big advantage because a lot of the product investments which we make for India are common… outside India, we also want to figure out which are those one-two big markets where we will spend money upfront and create a brand name and segment awareness.
You’re sufficiently well-funded now for a few more years. Is an IPO on the horizon or do you intend to stay private?
We have long-term aspirations and ambitions for the business. Will we have a strong option for an IPO soon in India and outside? We will have that option. Whether we decide to go public or decide to remain private, it’s too early to decide. But we’ll have both those options.
You mentioned that you will look at significant acquisitions. What kind of buyouts will you be looking at?
Currently, we’re looking at product acquisitions. We’re, in fact, just shortlisting some, but I can’t name any one of them. That’s where some part of the primary capital will be used.
Actually, none of them are from India.