3 min read.Updated: 09 Sep 2020, 05:49 AM ISTSalman SH
Silver Lake-led round drives up edtech firm’s valuation to $10.8 bn
The company has raised around $1 billion since January, reflecting the surge in investor interest in Indian edtech startups
Online education startup Byju’s raised $500 million from a group of investors, including private equity firm Silver Lake Partners, sending the valuation of the company founded by a star math teacher from Kerala to nearly $11 billion.
Existing investors Tiger Global, General Atlantic and Owl Ventures also participated in the investment round, Byju’s said in a note on Tuesday.
The company, named after its founder Byju Raveendran, has raised around $1 billion since January, reflecting the surge in investor interest in Indian edtech startups as remote learning replaced classrooms amid the lockdown. Companies such as Byju’s are benefiting from the readiness of Indian middle-class families to spend a big chunk of their income on education and tutoring to give their children an edge amid rampant unemployment.
The surge in investor interest has catapulted Byju’s into India’s second-most valuable startup, also earning it the decacorn status—the handful of startups that are valued at more than $10 billion.
It’s not just Byju’s. The pandemic has also helped rival edtech startups sign up thousands of paying customers. Last week, Unacademy raised $150 million in a funding round led by SoftBank Vision Fund 2, tripling its valuation to $1.45 billion in just six months.
Co-founder and chief executive Raveendran currently own 19.76% of Think & Learn Pvt Ltd, the parent entity of the Byju's brand. South Africa-based Internet and media giant Naspers Ventures BV is the second biggest shareholder which owns a 10.77% stake in Think & Learn. Raveendran's brother Riju Ravindran owns a 7.91% stake, making him the fifth largest shareholder, while the other co-founder Divya Gokulnath currently is the eighth largest shareholder with 4.05% ownership stake in the parent company. Other shareholders including investors, promoters, and employees (via ESOP pool) owns the rest of the shares.
The edtech segment is poised to get more attention from investors in the near future, according to Sanchit Vir Gogia, chief analyst and founder, Greyhound Research.
“A large part of the customer base that Byju’s and Unacademy is targeting are still learners who don’t have access to smartphones, tablets and other gadgets. Edtech will turn into a larger market opportunity when it disrupts the core curriculum of schools and colleges," Gogia said.
In a 19 May interview, Raveendran, 39, said, “Covid has been an inflection point for education where screens have become the primary mode of content consumption for students. The ‘classrooms of tomorrow’ will have technology at its core."
On Tuesday, he said the crisis has brought online learning to the forefront. “Our classrooms are changing possibly for the first time in 100 years, and I’m excited about the opportunities we have to redefine the future of learning," Raveendran said in a note.
The new round values Byju’s at $10.8 billion, up from its last valuation at $10.5 billion from its earlier Series F round that closed in August.
“This is a separate corporate round different from the earlier Series F round and there are more new international investors who are expected to fund Byju’s," said a person familiar with the development.
Byju’s was valued at around $8 billion in January when it raised $200 million in equity funding from New York-based hedge fund Tiger Global Management. That round had elevated Byju’s valuation by 45%.
Since then, Byju’s valuation has increased by a further 35%. It had turned into a unicorn in late 2017 when it raised money from a group of investors, led by China’s Tencent.
Founded in 2011 by Raveendran and his wife, Divya Gokulnath, Byju’s has more than 64 million registered students. Raveendran and Gokulnath were both teachers and turned to entrepreneurship when the Internet funding wave took off in India after 2010.
Raveendran started by uploading videos on YouTube under the Byju’s handle, explaining primary and high school concepts like algebra and probability. His first video published on YouTube in February 2011 has over 110,000 views.
Today, the company’s app has more than 4.2 million annual paid subscriptions.
Since the lockdown, Byju’s, which doubled its revenue from ₹1,430 crore to ₹28,00 crore in 2019-20, has seen over 20 million students joining its platform for free. The startup also made its fifth and largest acquisition of WhiteHat Jr., which teaches coding to kids, in an all-cash deal worth $300 million.
The boom in edtech is led by young and ambitious entrepreneurs such as Raveendran, who have harnessed technology to reach millions. Unacademy chief executive Gaurav Munjal said in an interview last week that he wants to make the firm the largest consumer internet company in India, displacing e-commerce and payments firms.
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