India-based educational startup Byju’s was widely reported to have raised a massive $400 million round, and now the company is making things official. The 10-year-old company revealed today it has pulled in a total of $540 million from investors to go after international opportunities.
The round is led by Naspers, the investment firm famous for backing Tencent that also includes educational firms Udemy, Codecademy and Brainly among its portfolio. The Canadian Pension Plan Investment Board (CPPIB) provided “a significant portion” of the round, according to an announcement that also revealed the deal included some secondary share sales. A source told TechCrunch that’s from Sequoia India, an early investor that is cashing in a piece of its winnings.
This round takes Byju’s to $775 million from investors to date. Its backers include Tencent, the Chan Zuckerberg Initiative — from Facebook founder Mark Zuckerberg and his wife — General Atlantic, IFC, Lightspeed Ventures and Times Internet.
The deal takes the company valuation to nearly $4 billion, a source told TechCrunch. That’s in line with what was reported by India media last week and it represents a major jump on the $800 million valuation that it commanded when it raised money from Tencent in July 2017. It also makes Byju’s India’s fourth highest-valued tech startup behind only Paytm, Ola and OYO.
Founded in 2008 by Byju Raveendran as on offline teaching center, it moved into digital courses as recently as 2015. The company specializes in grades 4-12 educational courses that use a combination of videos and other materials. Besides courses, the service covers exams, free courses and paid-for courses.
It claims to have registered more than 30 million students, while more than two million customers have signed up for an annual paid subscription to date. Raveendran told TechCrunch in an interview that there are currently around 1.3 million paying users. He said that the service enjoys a renewal rate of around 80 percent, and that it is adding 1.5-2 million new students per month, some 150,000 of which are part of paying packages.
English learning for kids worldwide
This new money will go toward globalizing the service beyond India, with a number of courses in English for children aged 3-8, an entirely new category for the company, set to launch next year. Those will include Math and Science.
Raveendran told TechCrunch that the service will target English-speaking markets, as well as other major international countries, including India.
“There’s a growing percentage of people wanting to learn English or [in countries where] it is becoming aspirational. Slowly but surely it is happening around the world,” he said in an interview.
The company will release the new services at the beginning of local academic years — which vary worldwide — with the aim of appealing directly to kids. If the youngsters enjoy the app, parents can buy the full experience for them. It’s a logical way to find a global audience — families prepared to spend on English tuition exist worldwide — whilst also expanding into a new customer base that could become users of the core Byju’s service.
While the company has developed the core content aspect of the service, Raveendran said he is on the lookout for acquisitions and partnerships that can add more to the appeal.
“They will all be product-based acquisitions that will be value-adds on top of our core product,” he said. “Over the last 12 months, we’ve scouted for core product acquisitions but went the other way around and decided to build it ourselves.”
Further down the line, Byju’s may develop more localized services in countries where it sees high demand for the children’s product, Raveendran added.
Global investor base
That expansion is likely to be influenced by Naspers, which has a very global portfolio, including deals in emerging markets like Southeast Asia, Latin America, Africa and Eastern Asia. Indeed, the deal sees Russell Dreisenstock — head of international investments for Naspers — join the Byju’s board.
Tencent also has experience and connections, having backed China’s Yuanfudao education platform, which is now reportedly valued around $2.8 billion. Alongside Sequoia — another Byju’s investor — it is also part of VIPKid, a hugely successful platform that connects U.S.-based teachers with English language learners in China.
Despite that, Raveendran said those investments are unlikely to be core to this global push.
“We expect [our investors] to help us finding partners through portfolio companies or others [but] there is no significant overlap with what we will do,” he explained.
In the case of VIPKid, he said that if Byju’s “ever decides to do anything in China” then it is likely that it will complement VIPKid’s tutor-led approach to learning rather than take it on directly.
Still, Raveendran expects the global business to become profitable and self-sustaining within the next three years. Already, the India-based business is profitable as of this year, he said, but its appeal has grown globally somewhat even before this new product launch. Overseas is currently 15 percent of revenue, a figure that the CEO puts down to the Indian diaspora globally.
Note, 12/17 03:58 PST: Article updated to explain that the English services will be Math and Science.