upGrad, the edtech firm promoted by media entrepreneur Ronnie Screwvala, is in advanced talks to raise as much as $100 million in a funding round led by Singapore’s Temasek and International Finance Corporation (IFC).
Temasek, a sovereign wealth fund, is preparing to invest about $50 million in the round, valuing upGrad at $450-500 million, said two people aware of the matter. IFC, a financial institution and member of the World Bank, said it is committed to invest $45 million in upGrad earlier this week but negotiations are ongoing, they said, requesting anonymity.
Online Education Boom
Founded by Screwvala in 2015 along with Phalgun Kompalli and Mayank Kumar, upGrad focusses on executive education, providing MBAs and other Masters degrees in fields such as data science, machine learning, marketing, law, public relations, and psychology, among others. It has partnered universities such as the Indian Institute of Technology-Madras, Narsee Monjee Institute of Management Studies-Mumbai and Deakin University in Australia.
Screwvala has been looking to raise funds for upGrad independently for the past two years. If he is successful in raising money, he could join a bunch of Indian online education startups such as Byju’s, Vendatu and Unacdemy that are riding a wave of unprecedented investor and customer interest after the COVID-19 pandemic’s shuttered schools and boosted online education in India.
upGrad and Temasek declined to comment for this article.upGrad expects to end FY21 with a revenue of Rs 1,200 crore, according to multiple media reports. That would be a nearly ten-fold jump in revenue from the Rs 164 crore operating revenue the company posted in FY20 on a total loss of Rs 79 crore, according to regulatory filings.
A deal would give upGrad ammunition to expand globally like its online education counterparts Coursera and Udacity. “Given that many professional courses teach the same things globally, if a company can have global tie-ups, then there’s no reason it can’t have customers globally as well. It boils down to sales and marketing if your course tie-ups are in order,” said a person tracking the space, requesting anonymity.
Eruditus, another Indian edtech firm that also operates in the same space, was valued at $800 million in September 2020, when it raised funds from Sequoia Capital, Prosus Ventures (Naspers), and the Chan Zuckerberg Initiative, among others.
For Screwala, “raising a round at this valuation from external and well-known investors gives the business more legitimacy and credibility,” the person who tracks online education said.Temasek is looking to increase its investment in internet startups. Over the past 18 months, it has invested in health and fitness startup Cure.fit and online pharmacy PharmEasy.