Executive education firm Eruditus is in discussions to raise funds valuing it at $2.5 billion- a threefold jump in nine months- and a deal that could make it India’s second most valuable online education firm after Byju’s.
Eruditus is in preliminary talks to raise $200 million from new and existing investors at a valuation of $2.5 billion. It has appointed Avendus Capital as the investment banker to manage the fund raise. Terms of the deal could still change and Eruditus has not finalised an investor yet, but the valuation signals its own growth and continuing investor appetite for high growth internet companies.
It has held preliminary conversations with SoftBank, Tiger Global and DST Global, among others, but a term sheet has not been issued yet.
Eruditus and Avendus declined to comment.
Eruditus will also use the money to finance its recent acquisition of iD Tech, a $200 million cash deal for the summer camp firm which now offers short term courses year-long for teenagers in coding, game development and robotics.
Founded by Ashwin Damera and Chaitanya Kalipatnapu in 2010, Eruditus started out with offline classes with faculty from Europe’s INSEAD and the Indian Institute of Management (Ahmedabad) teaching a 10 day-classroom program in a 5-star hotel for 10-15 people.
From 2015 onwards, it started an online teaching model and raised venture capital from investors such as Bertelsmann and Sequoia Capital India. It was last valued at $800 million in October 2020 when it raised $113 million led by Prosus Ventures (Naspers), the Chan Zuckerberg Initiative and others.
For FY21, Eruditus recorded a revenue of $185 million, compared to $100 million in FY20, CEO Damera told Moneycontrol last week when it announced the iD Tech acquisition. It expects to more than double its revenue for FY22, with iD Tech also expected to have $100 million in revenue by the end of 2022.
“They are one of the few global Indian internet startups. And they can still get bigger in China and Latin America. The valuation is a result of the general bullishness over edtech and Coursera’s IPO,” said an investor aware of the matter, requesting anonymity.
Coursera, which offers short term courses in partnership with universities around the world, went public at a $7 billion valuation last month. For the year ended December 31, 2020, Coursera earned $293 million in revenue and had $66.8 million in losses. However, since its listing, its share price has fallen, valuing the company at $4.5-5 billion- still an aggressive 15 times of its 2020 revenue.
Eruditus could become India’s second most valued edtech if the deal happens, only after Byju’s- which was valued at $15 billion last month. Online learning firm Unacademy was valued at $2 billion last year. All three firms count Sequoia Capital as a common investor.
Investors could also find Eruditus an attractive bet given that it has forayed beyond its executive education market, into the larger and more lucrative K12 market with the iD Tech buyout.
“Eruditus is going to be pitched (to investors) as a company that can really own a significant chunk of the edtech market. K12 is a bloody battle with lots of players, but iD Tech is a differentiated play, and such acquisitions will play a huge role going forward,” said another person aware of plans.
The deal would also make Eruditus a unicorn- privately held firms valued at over a billion dollars, and India’s third edtech unicorn after Byju’s and Unacademy. India has seen unicorns created at a record rate this year- 14 in five months so far, compared to 11 in all of 2020.