$100 mn fundraise propels Vedantu into unicorn club

Online tutoring platform Vedantu is now the fifth Indian edtech to achieve the unicorn status as the company raised $100 million in Series E funding led by Singapore-based ABC World Asia.

The round, which also saw participation from existing investors Coatue, Tiger Global and GGV Capital, values the firm at $1 billion.

While the round is largely closed, it may see minor participation of $5 million to $10 million from new investors, Vedantu’s chief executive Vamsi Krishna told Mint.

Vedantu’s entry in India’s unicorn stable signifies the continued investment momentum in India’s edtech space. This year alone, higher learning and upskilling platforms Eruditus and upGrad joined India’s unicorn club.

Further, companies such as Byju’s and Unacademy have almost doubled their valuations over the past year alone.

According to Vedantu, it will be using the proceeds from the current round to double down on the kindergarten to grade 12 (K-12) learning segment, while looking to diversify its extracurricular course offerings and expand internationally.

The 11-year-old startup focuses on providing live tutoring courses to students from 3 years to 18 years of age. It also offers test preparation for competitive exams such as IIT-JEE, National Eligibility cum Entrance Test (NEET), and school boards such as Central Board of Secondary Education (CBSE), Indian Certificate of Secondary Education (ICSE), and state exams such as Maharashtra boards.

"Even before the pandemic, Vedantu was almost doubling to tripling its (revenue) growth annually. As schools begin opening up, we continue to register three-fold growth across our key metrics and feel this will sustain in the coming years as well. Further, we will continue our focus on the K-12 segment since online penetration continues to be barely 5% for this segment, leaving a large headroom to grow," said Krishna in an interaction with Mint.

Krishna added that the company is looking to set foot in international markets over the next 12-5 months. While plans are still early, it is actively exploring the West Asia and Southeast Asian geographies for its international foray.

The company is also looking to make acquisitions to enhance its product portfolio and aid its international expansion.

The online learning platform will also look to introduce Indian language courses on its platform. Currently, almost 55% to 60% of the company's revenues come from live tutoring offerings, with test preparation contributing to another 30%-35% of overall revenues, Krishna said.

Vedantu registered almost 4.5x revenue growth last year alone, as covid continued to provide tailwinds to digital learning formats.

The company is currently clocking $65 million in annual revenue run-rate and plans to more than double this number by next year.

"Vedantu embodies our investment themes of providing better access to quality education and using digital technology to improve lives and livelihoods. In India, online education has the potential to extend the scope of ‘Right to Education’ to students in the underserved community and capture the ‘Next Half Billion’ income group, representing over half of the country’s student population. With edtech experiencing meteoric growth in India, Vedantu as the pioneer and category creator in LIVE online tutoring is driving the tectonic shift towards online learning," said Sugandhi Matta, chief impact officer, ABC World Asia.

Currently, more than 35 million unique users visit Vedantu's free learning platform, every month. As per the last academic year, the company had a paid user base of close to 200,000.

According to Krishna, the company will look at listing in the public markets by 2024. Recently, Mint reported that rival Byju's was accelerating its plans to go public and weighing both the India and US markets for a potential 2022-listing.

The K-12 learning segment is expected to almost grow by 6.3 times and create a $1.7 billion market by 2022, according to a recent report by management consultancy Redseer and impact fund Omidyar Network India.