upGrad acquires The Gate Academy, forays into test preparation market in India

Edtech start-up upGrad has made its entry into the test preparation market by acquiring The Gate Academy (TGA) for an undisclosed amount.

Post the acquisition, TGA will operate as a subsidiary of upGrad and will continue with its brand name. Ritesh Raushan will pursue as the CEO of the entity to build this business line, with support from upGrad, who will be providing its proprietary online learning solution and tools for enhancing the learning experience, as well as its sales, marketing, and content prowess.

upGrad also plans to invest over Rs100 crore into this test preparation subsidiary and will be developing over 20,000 hours of content in multiple languages to provide access to at least one million test-takers annually.

Bengaluru-based TGA is one of India’s leading coaching institutes with 57 centers across India and 76 million video hours consumed by its almost 2 lakh enrolled learners for GATE and other entrance tests for various Public/Government Sector jobs. Data shows that just the Government Exam Prep market sees around 40 Million applicants every year spending in a range of ₹10,000, thus opening up a new ₹400 Billion market for the ed tech platform.

“TGA provides upGrad a non-linear growth opportunity in new-segment entry and deeper penetration in the semi-urban & rural markets, which is in line with our core vision of making Bharat employable by adopting the mantra of LifeLong Learning. With every strategic move, we are ensuring that upGrad leads from the front as India emerges as the teaching capital of the world,” said upGrad co-founders Ronnie Screwvala & Mayank Kumar in a joint statement.

Ritesh Raushan, Founder & CEO, The Gate Academy said, “We all are very excited to join hands with upGrad team. We aim to employ our extensive experience in both physical and online modes of teaching to create a world-class product that will bring fundamental changes in the way technology enables learning in the future.”

Edtech startups have gone on an acquisition spree in 2020, boosted by remote learning. Between January-August so far, there have been 13 buyouts worth a billion dollars, compared to 9 buyouts totalling $520 mn in 2019, according to data sourced from Traxn. Mergers and acquisitions (M&As) are expected to continue in edtech as well as e-health startups, given the interest from investors as well as larger firms buying out smaller counterparts. Byju's, Vedantu and Unacademy have been steadily buying out niche startups to diversify portfolios.The largest acquisition to date in the ed tech space has been BYJU's acquiring code training app WhiteHat Jr for $300 million. Similarly, Unacademy bought PrepLadder, a postgraduate medical entrance exam preparation platform for $50 million in July as it looks to strengthen its presence in medical entrance examination categories. This was Bengaluru-based Unacademy’s third acquisition. In March, it acquired Kreatryx, an online preparation platform for the Graduate Aptitude Test in Engineering and the Engineering Services Exam, as part of its organic growth strategy.

For upGrad, this is a first among the series of M&A’s, they plan to announce over the next three months, in allied fields of higher education.