Bengaluru: The valuation of Byju’s surged by $2 billion to $5.5 billion in its ongoing Series F funding round, an unprecedented jump within a single round, as investors clamoured for a piece of the education startup that has reported dizzying growth.
Byju’s, India’s most valued ed-tech company, has so far raised ₹3,159.4 crore ($460.8 million) in the round, led by investors such as South Africa’s Naspers, private equity firm General Atlantic, and Canada Pension Plan Investment Board, shows data sourced from business information platform Paper.vc.
The firm first raised capital in the ongoing Series F round in December, giving it a valuation of $3.5 billion. In the fourth round in the first week of July, it raised $86 million ( ₹589 crore) at a valuation of $5.5 billion.
Such valuation differences within a round are uncommon. Experts said the valuation jumps are a function of Byju’s rapid growth. Bengaluru-based Think and Learn Pvt. Ltd, which runs Byju’s, grew its revenue threefold in the year ended 31 March to ₹1,430 crore and turned profitable on a full-year basis.
“It is likely that it is commanding steep increases in valuation on a month-on-month basis, not year-on-year, as other startups might," said Vivek Durai, founder of Paper.vc. “Among India’s unicorns, Byju’s has the highest leverage today vis-a-vis prospective investors."
Its expansion into grades I-III and entry into the US market have contributed to the valuation jump, investors said.
Byju’s is benefiting from Indian parents’ willingness to spend on education to give their children an edge. It has already attracted more than 35 million students, assisting them to understand concepts in maths, science and English.
Byju’s growth is expected to continue as it expands its learning programmes for K-12 students and ventures into new markets.
“Given that in ed-tech there are not too many other large companies available to invest, Byju’s will attract a premium. There are other parameters such as customer acquisition costs, life-time value of users, which is also much higher for Byju’s than other competitors," said an investment banker on condition of anonymity.
There could still be more valuation jumps. In many cases, investors are offered a different set of rights and conditions such as liquidation preference and anti-dilution protection.
“An amount that an investor pays for a stake in a startup or a new-age company could include an insurance premium for certain rights like liquidation preference and anti-dilution protection. The value of these rights could be as high as 20% of the total investment amount with the balance (80%) being the value of the pure equity," said Santosh N., senior adviser-valuation at Duff and Phelps, one of the largest valuation service providers in the world.