Home / Companies / People /  Vedantu planning a fundraise and is not up for sale, says co-founder

Vamsi Krishna the co-founder and chief executive of live tutoring startup Vedantu appeared hassled on Friday, following media reports that his edtech start-up BYJU’s wants to acquire them. On Friday, news portal Entrackr was the first to report that BYJU’s was in advanced talks to acquire Vedantu for up to $800 million. Vedantu competes with BYJU’s in the live tutoring format for kindergarten to 12 (K-12) segment in India. Four individuals close to BYJU’s and Vedantu that Mint spoke to, said on condition of anonymity that BYJU’s did reach out to Vedantu between September and October last year to explore a buyout. However, there has been no such move this year.

In an interview, Krishna termed all such news an ‘unnecessary distraction’ for the company. He asserted that Vedantu is not up for sale--at least for now. Instead, he added that Vedantu may announce a new fund raise in the next three weeks as it plans to sharpen its focus on the K-12 segment. The funds are raised at a valuation of $1 billion, said two individuals aware of the discussion. Edited excerpts:

There are strong rumours about Vedantu being acquired by BYJU’s. We would like your version.

We haven’t been reached out by BYJU’s this year for an acquisition. We didn’t start Vedantu to get acquired or to chase high valuations. There were several acquisition offers last year, which we haven’t considered seriously or even taken to Vedantu’s board. Rumours of our acquisition come as a complete surprise, as we haven’t even had one direct conversation with anyone this year. We (Vedantu founders) have been in the education industry for 15 years. If exit outcomes were so important to us, we wouldn’t have built Vedantu or been in edtech.

At present, Vedantu is growing 3-times year-on-year and we have no reasons to get acquired. So talk of our acquisition is just a ‘figment of someone’s imagination’. We continue to build Vedantu.

When do you expect to close your new fund raise?

We are in the midst of a new fund raise, at present. Since we still have to close it, we cannot disclose the quantum. However, we will announce it this month. (Vedantu is expected to close around $100 million as a part of its latest fund raise, at a valuation of $1 billion, said two individuals to Mint, on condition of anonymity. Most of the term sheets have been received and the funds will be raised across tranches, added the individuals.)

Are these rumours expected to impact your current fundraise? What are you hearing from investors?

All our investors have been in the business for long, and are used to these ‘rumours’. We are fortunate for their backing. Unfortunately, managing these rumours gets challenging, and we have received several calls from our vendors since morning.

BYJU’s and Vedantu have common investors. How does that affect Vedantu?

The only common investor between us is Tiger Global, and so far we haven’t faced any challenges. Tiger has opted to not take a board seat in Vedantu, which as a practice they have followed for certain other investments as well. We value Tiger on our cap table, since they have backed several successful businesses in India.

With market dynamics choosing its leaders in Edtech, has it been difficult to raise funds?

Agreed there is competition, but there is also a large market up for grabs. With consolidations at play, there will be two to three market leaders left. Vedantu is a challenger brand, growing at three to four-times annually. Hence, we attract investors which care about growing their investments also 3x-4x. The return equations for most investors don’t make sense if they back startups with bloated valuations, and Vedantu is a lucrative option there. So for the above reasons, there isn’t a challenge in fundraising, as we continue to attract investors who expect much higher returns from us now.

With new funds coming in, what will Vedantu’s focus be? Will it enter newer markets of higher learning through acquisitions?

No, we will continue to focus on K-12 and deepen our offerings for the segment. We are always open to acquisitions but our investments will be on improving teaching experiences, our reach and delivery of our courses as we look to improve outcomes for our students.

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