An education technology unicorn built by a cable TV-era entrepreneur almost doubled its valuation after raising $225 million in fresh funding, balking a frosty global venture capital environment.
India’s UpGrad Education Pvt, founded by Ronnie Screwvala, increased its valuation to $2.25 billion in the round that included billionaire James Murdoch’s Lupa Systems LLC and US testing and assessment provider Educational Testing Service, according to a person familiar with the deal. ETS develops and administers standardized tests including the TOEFL (Test of English as a Foreign Language) and Graduate Record Examination (GRE).
The family offices of Indian billionaires Lakshmi Mittal of steelmaker ArcelorMittal SA and Sunil Bharti Mittal of telecom operator Bharti Airtel participated in the round, as did existing investors including Temasek Holdings Pte, said the person who asked not to be identified as the details are confidential.
UpGrad’s fundraising bucks the trend. Indian edtech startups, particularly those in the K-12 segment, have shuttered operations, fired employees or curtailed expansion plans, after a temporary boost from pandemic-induced school closures. Venture capital investments globally have declined as technology valuations have suffered this year.
India’s higher-education and “upskilling” startups, the niche UpGrad is in, have fared better by catering to older customers seeking expertise, an additional degree or help to crack the ultra-competitive entry tests for India’s elite engineering, medical and business schools.
“India will write the global higher-edtech story,” Screwvala, the company’s chairman, said over a video call. “There’s an insatiable global appetite for upskilling and upgrading to diplomas, degrees and doctorates, all of which have measurable outcomes such as a new job, a raise or a promotion.”
Screwvala, 65, confirmed the funding amount but declined to comment on the valuation or investors. An email sent to an UpGrad spokeswoman elicited no response. The funding round is set to increase by a further $100 million during a second close at a higher valuation, said the person familiar with the plans.
Screwvala built a trend-setting cable-TV company in India in the 1980s, turning it into a unicorn that was acquired by Walt Disney Co. His latest startup raised capital from Temasek and others a year ago at a valuation of $1.2 billion.
UpGrad is targeting $500 million in gross revenue in the year ending in March 2023, the founder said. College students and working professionals in India will account for four-fifths of that, but in about three years, domestic and international sales will even out, he said.
The Mumbai-based company spans several segments, from test prep to study abroad, and undergrad degrees to campus courses in 250 universities. Its offerings include finance, law, business and software for the 18-60 age group. Screwvala founded UpGrad in 2015 with Mayank Kumar and Phalgun Kompalli to offer short courses on entrepreneurship and data science. The founders combined own about 55% of the equity.
In the financial year ending next March, an estimated 3 million learners will take UpGrad courses that run from a few months to a few years, and cost 50,000 rupees ($640) to 800,000 rupees. Besides India, the startup is growing rapidly in Indonesia, Vietnam and the Middle East.
“Global edtech consolidation is on the cards and we’ll build a $30 to $40 billion higher-ed company,” Screwvala said. “We plan to have an IPO in about two years -- for solidly built companies, there’s no good or bad time for an IPO.”
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