With USD 795 million being poured into Indian education tech companies in the first half of 2020, it’s no exaggeration to say that this year is dedicated to edtech startups. The momentum is expected to carry well into the second half of the year as well.
Bengaluru-based live tutoring startup Vedantu said Thursday it has raised USD 100 million in its series D funding round led by US-based tech-focused hedge fund Coatue Management, with participation from existing investors. This funding round valued the company at USD 600 million, which the company claimed makes it the second most valued edtech company in the country after Byju’s.
Rahul Kishore, managing director at Coatue Management will also join Vedantu’s board. While it has invested in an array of Indian technology companies including food delivery startup Faaso’s and fintech company BharatPe, among a few others, this is its first investment in an edtech company in the country.
This funding comes six months after the company completed its Series C round with USD 6.8 million investment from South Korean fund KB Global. The six-year-old company has raised a total of USD 204.4 million as of now.
Vedantu said it would use the funding to scale impact and expand into new categories.
COVID-19 fueled growth
Founded by three engineering graduates, Vamsi Krishna, Anand Prakash, and Pulkit Jain, Vedantu claims to be the market leader in K-12 live tutoring space. In addition to providing live classes for K-12 students, the company also prepares students for competitive exams like JEE and NEET.
“Online learning adoption in India is at an all-time high setting a new benchmark for the rest of the world. As we continue to focus on driving high-growth ventures, our investment in Vedantu marks our entry into the Indian edtech market. This move underlines our strategy to partner with companies that are strategically positioned for high growth and scale,” Coatue’s Kishore said in a statement.
As the country went into lockdown in late March to contain the spread of COVID-19, online tutoring startups made their classes and content free for all, including educational institutes, to help students continue with their studies. This proved to be a landmark moment/decision for edtech companies as their user numbers and engagement on their platforms soared up.
While the industry leader Byju’s claimed to have recorded “a 60% increase in the number of new students,” Vendantu said it registered a growth of 220% during the lockdown. During the pandemic, Vedantu has entered the early learner segment with the launch of its coding program for 6-12 years called Vedantu SuperKids, it said in a statement.
The company claimed over 25 million students every month access free content on its platform. More than two million students attend its free live classes with teachers delivering over eight million hours of classes live on the platform. In comparison, Byju’s claims to have 57 million registered students, of which more than 3.5 million are paid subscribers, with an annual renewal rate of 85%.
Investors lap up remote solutions
As the global economy is going through a slowdown caused by the pandemic and the tech companies are moving towards creating solutions for remote operations, investors have recognized edtech as one of the few sectors with promising growth potential. Along with Coatue Management, San Francisco headquartered venture capital firm Bond also made its maiden investment in Indian edtech space by leading an undisclosed funding round in Byju’s. Facebook also joined the list of global firms backing an Indian edtech company for the first time by leading a USD 110 million funding round in Unacademy.
With multiple players in this sector—many operating in the same space and targeting the same user base—even the startups are moving fast to acquire their smaller competitors in their bid to rise to the top. The world’s most valued edtech company Byju’s is in talks with doubt solving platform Doubtnut as well as Mumbai-based WhiteHat Jr. that helps kids learn coding to create games, animations, and apps.
In June, Unacademy acquired 11-year-old company CodeChef for an undisclosed amount, while earlier this month it picked up majority stakes in Mastree for USD 5 million to position itself as a strong player in the kindergarten space. The Facebook-backed company also acquired exam preparation startup PrepLadder for USD 50 million.
As the hullabaloo around the online education space continues, India’s largest conglomerate, Reliance, is silently building its capabilities in the hopes of trumping the dominance over leading players. One of the use cases, that Reliance is pushing for its newly launched video conferencing tool JioMeet, is to facilitate online classes. It has already acquired Embibe, an edtech company in 2018 to provide educational content. During its annual general meeting on Tuesday, the company announced its working on a 3D holographic tool called JioGlass that would revolutionize how online classes are held.
“With JioGlass, the traditional way of learning Geography will now be History,” said Akash Ambani, director at Reliance Jio.