The online education sector in India received a massive boost in 2020 as the pandemic gave rise to strong financial and strategic investor activity. With the focus shifting from physical classes in schools and colleges to learning online, it is hardly a wonder that edtech start-ups have profited from the situation – startups like Naspers and Tiger Global-funded Byju’s as well as SoftBank-backed Unacademy have evolved into unicorns.
Six-year-old edtech start-up upGrad, promoted by media entrepreneur Ronnie Screwvala, is heading down the same path as it raised $120 million from Singapore-based investor Temasek Holdings, marking the first instance of upGrad getting an external investor. The Mumbai-based start-up is expected to have a valuation of $575-675 million post-funding.
“We are not quite a unicorn, but we’ll get there soon,” Screwvala said in an interview via Zoom video call. He expects to raise more capital in three to six months and is targeting the milestone of earning $2 billion in revenue by 2026.
“We welcome Temasek in our mission to power career success for each and every member of the global workforce,” he added.
Screwvala’s upGrad targets older Indians who are on the lookout for specialist skills, an additional degree, or a better preparation for entrance exams for top engineering, medical and business schools in the country. With an annual revenue run rate of $165 million, upGrad aims to use the proceeds from the funds raised to expand to overseas markets (especially in the US, UK, Middle East, and the Asia-Pacific) and expand its graduate degree portfolio, make mergers and acquisitions (M&A) that complement its ecosystem in higher education and working professional bases. It also plans to launch an app that will offer everything from masterclasses to soft skills training.
Currently, upGrad has carved for itself a comfortable niche in the Indian digital education market. It has come a long way from offering courses on entrepreneurship and data science – today it offers over a hundred courses in a variety of subjects like data science, machine learning, artificial intelligence, coding, finance, and law, in collaboration with universities like Michigan State University and the Indian Institute of Technology Madras (IIT Madras). It has a user base of about a million learners already, both from India and abroad, who take courses that run from six months to two years and cost between ₹ 2,50,000 and ₹ 5,00,000.
“We think the post-K-12 segment is going to be much larger than the K-12 segment in coming years,” Screwvala said. “Online degrees, especially undergraduate degrees, are a highly scalable opportunity.”
The firm had acquired The Gate Academy and recruitment and staffing solutions firm Rekrut India last year and now aims to go public in time. According to Screwvala, being a listed company “changes your profile around the world.”
“It’s a long-term business that we’re growing. As much as funding is a stepping stone towards building that, an IPO takes it to another level,” he said.
The edtech sector has grown much in the past year, not just with investments but with acquisitions as well. Byju’s, which has raised around $2.77 billion so far, recently acquired JEE- NEET preparation institute Aakash Educational Services Limited in a deal close to $1 billion. It had also acquired coding platform WhiteHat Jr. last year for $300 million.
