Byju’s said on Wednesday it has acquired California-headquartered reading platform Epic for $500 million, the latest in a series of moves from India’s most valuable startup as it deepens its footprint in the U.S. market.
The deal involves both cash and stock, and Epic founders Kevin Donahue and Suren Markosian will continue to run the business, they said in an interview with TechCrunch.
Epic operates an eponymous digital reading platform for kids aged 12 or younger. The platform, which has a presence across 90% of elementary schools in the U.S., has amassed more than 2 million teachers and 50 million kids (up from 20 million last year).
Epic, which counts Evolution Media as an early backer, collects and analyzes real-time anonymized and aggregated data on how many children read a book, how deeply they engage with it and where their interest starts to wane. In a Netflix-esque move, the firm has also started to release several print versions of its own original titles.
TechCrunch reported in March that Byju’s was in talks to acquire Epic. Donahue and Markosian are no strangers to Byju’s. They first met with Byju Raveendran, co-founder and chief executive of the eponymous Indian startup, four or five years ago, but conversations about an acquisition only began this year, they said.
Raveendran (pictured above) said in an interview that his son uses the app, which gave him the conviction to explore any opportunity with the startup more seriously.
“We started Epic about eight years ago with the goal of bringing books to every child. We thought through technology we can get kids excited about reading and we can remove any barrier between the child and book. We are now in almost every school in the U.S., reaching over 50 million kids and a billion books read,” said Markosian.
“It has been our personal passion to build this platform because we wanted our kids to read more, too. So when we got to this point, it really made sense for us to look at scaling globally and internationally. When we started to talk to Byju, we realized that we share a common passion for education and belief in technology helping solve this opportunity. Together with Byju, we can take Epic to the next level,” he said.
For Byju’s, the new product expands its current portfolio and brings expertise about a demographic of the U.S. that the startup has been looking for, said Raveendran. The addition of Epic to Byju’s offerings is “complementary from a product standpoint, as reading is a very powerful format for students to learn,” he said.
“The distribution they have will also help us offer more options to students in the U.S. and reach a demographic that we have also been working to serve. They understand this demographic very well,” he said.
Earlier this year, Byju’s rebranded its international business as Byju’s Future School, as part of which it is offering coding and math in synchronous and asynchronous formats to students, and plans to add music, English, fine arts and science to the catalog. Raveendran said he hasn’t decided whether Epic will be rebranded, acknowledging that the California-headquartered startup has a strong brand awareness in the U.S.
Byju’s, which launched a learning app featuring Disney characters in the U.S. earlier this month, now has three large offerings in the U.S. that Raveendran expects will generate $100 million each in revenue this year alone. “Our ambition is to make a global impact,” he said.
The startup plans to invest $1 billion in its North America business, he said. Byju’s also plans to bring Epic’s offering to India and other markets, he added.
Acquisitions and fundraise
Epic is the latest in a series of acquisitions by Byju’s. In the past two years, the startup has acquired U.S.-based kids-focused “phygital” startup Osmo (for $120 million), online coding platform WhiteHat Jr. (for $300 million), coaching centre chain Aakash (for nearly $1 billion) and Indian edtech startups Toppr* and Gradeup*. (*Yet to be officially confirmed.)
“We have not done acquisitions for the sake of doing it,” said Raveendran, who himself is a teacher, pointing to the growth and success of firms he has acquired post-acquisition and how these firms have been led by their original founding teams. “Our aspiration is very long-term. We work with the founders to help them turbo-charge their growth,” he said, adding that the startup is open to exploring more M&A opportunities.
Byju’s, which has raised about $1.5 billion since the pandemic broke last year and has attracted several high-profile investors, including Blackstone, said the fundraise in recent years has helped the startup to acquire younger firms. He said the startup currently doesn’t plan to raise more external capital, but he didn’t rule out more fundraises in the next few months.