The Chan Zuckerberg Initiative (CZI), a non-profit headed by Facebook CEO Mark Zuckerberg and his wife Priscilla Chan, is in advanced talks to invest in Indian online learning startup Eruditus, sources have told Moneycontrol.
Founded in 2010 by Chaitanya Kalipatnapu and Ashwin Damera, Eruditus offers management programmes and short courses remotely. It has tie-ups with foreign universities, including Columbia University, Massachusetts Institute of Technology and Harvard Business School.
Its subject areas include leadership and management, data science, digital transformation, banking and finance.
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“Eruditus has been growing well and has been a real revenue business from Day 1. COVID has only boosted their business thesis. A well-known firm like CZI coming in indicates their long term view on the business and sector” said a person close to the company, requesting anonymity.
Eruditus and CZI did not respond to Moneycontrol’s emails seeking comments.
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CZI will be joined by a couple of other US-based technology funds, investing about $80 million at a valuation of $800-850 million, sources said. This is double the $400 million it was valued at in January 2019 when it raised $40 million led by Sequoia Capital India.
Eruditus plans to use the funds to expand to more countries, improve product functions, and make selective acquisitions, sources said.
The coronavirus outbreak has given a big boost to online education startups, with students forced to learn from home using digital platforms.
Startups such as Byju’s, Vedantu and Unacademy have seen usage double and triple over the last few months, numbers which would otherwise have taken at least two years to achieve.
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CZI is also an investor in Byju’s, where it invested an undisclosed amount in 2016. This would be its second investment in an Asian startup, though it is an investor in over a dozen online education companies globally.
For FY20, Eruditus had revenue of $100 million and during the pandemic, demand is growing 30 percent quarter-on-quarter, sources said.
Online education is among the more profitable businesses in startups, as the revenues are real, parents are willing to pay for quality education and costs are mainly hiring teachers and a technology platform. Unlike other sectors, discounts or cash burn is less common.
Indian edtech startups, including Eruditus, have raised over $800 million this year, so far, as investors flock to one of the few sectors that have gained from the outbreak.
For edtech firms, whether they retain customers even after the pandemic when students can return to physical classrooms, remains to be seen.
Eruditus, however, focuses on a segment where revenue per user is high—at least a few thousand dollars—and it has users across the world, from developed markets such as the US and Europe to newer markets such as Latin America. This broader base can help it grow even after the pandemic subsides.