Moneycontrol PRO
Upcoming Event:Attend Algo Convention Live, 2 Days & 12+ Speakers at best offer Rs.999/-, exclusive for Moneycontrol Pro subscribers. Register now!

Germ of an idea: How edtech firm Eruditus was founded

For Ashwin Damera, the co-founder and CEO of edtech unicorn Eruditus, his first entrepreneurial gig was a path paved with thorns.

February 12, 2022 / 03:40 PM IST
In Ashwin’s case, he knew all along that education was the tool that had totally changed his life.

In Ashwin’s case, he knew all along that education was the tool that had totally changed his life.

Note to Readers: This is the first article in a new series on how an entrepreneurial idea was conceived, shaped and launched, detailing the early days filled with uncertainty and apprehension, the bold steps and the eventual success. The Germ of an Idea series hopes to inspire thousands of potential Indian entrepreneurs who are on the cusp of starting-up or have ventured recently or are currently in schools and colleges dreaming of turning founders.

For Ashwin Damera, the co-founder and CEO of edtech unicorn Eruditus, his first entrepreneurial gig was a path paved with thorns. “Your company and its business are worthless. If we don’t put in the money now, you are logo-germ-of-an-idea3bankrupt,” an investor told Ashwin Damera more than a decade ago, when he was running online travel firm Travelguru, as a young entrepreneur.

That felt like a dagger being thrust into his chest.

The start-up quickly went south - the details of which are given further down this piece – and Ashwin was all at sea. He had to find the next big idea.

Yes, a real big idea.


The Germ

Ashwin was clear that he did not want to start just another business. His mother was of the opinion that he shouldn’t start something just to make money out of it. There had to be something beyond that, she felt. The business should impact and change people’s lives. That was his mother’s advice. This set Ashwin thinking.

In Ashwin’s case, he knew all along that education was the tool that had totally changed his life. He also knew that quality education can be expensive and that elite colleges are extremely tough to get into.

Despite scoring very highly in his 12th grade CBSE exams, he couldn’t get into any of the top colleges in Chennai, where the family was based. He eventually did his BCom through a correspondence course before doing his chartered accountancy (CA).

His brother, who was academically brilliant, had secured admission in Georgia Tech in the US but couldn’t find a scholarship to fund it. The family couldn’t afford to send him to the US, without a scholarship. These life lessons had made a deep impression. So, when the question of what to start next came up, education was a clear choice.

“For most people with modest means, Goddess Saraswati (education) is the way to find Goddess Lakshmi (wealth). I knew this,” says Ashwin. The edtech start-up idea took root, as a concept, that very month, in June 2010.

Eruditus is a unicorn today, with a valuation of $3.3 billion, having raised over $800 million in funding.

Also read: Germ of an Idea | How three friends battled legacy players to turn Darwinbox into a unicorn

The Early Days

Chaitanya Kalipatnapu, the boy from Eluru in Andhra Pradesh, was one who believed in the power of education. He had worked with INSEAD and had good exposure to how universities and faculties functioned. Meeting him was a turning point of sorts for Ashwin. They shared the same values and vision. “We hit it off, almost instantly,” says Ashwin, who has Telugu roots.

Initially the edtech company was called Kenviron. The business model was very different. The plan was to convince leading faculty members in universities to come on board and teach specific subjects and design the course curriculum. But the model proved more difficult to execute than they thought. Initially, only 12 students enrolled for the module.

The going was tough and they were not able to pay the lecturers on time. Despite that, a few of the lecturers continued with them, driven by the purpose of putting together a quality curriculum. But shortly, they had to flip the model. “The faculty model wasn’t working. So, we decided to go the institutional route.” It became clear that students valued certificates from top universities overseas much more than what the founders had originally envisaged. It was not just about the quality of content dished out.

The four of them - co-founder Chaitanya Kalipatnapu and his wife and Ashwin and his wife – started boarding economy class flights to the US and stayed in the cheapest hotels that they could find, in the hope that they will be able to tie-up with any one of the universities there. But that was quite tough. No one was really looking at India for tie-ups back in 2011-12. “Even Harvard Business School (where Ashwin studied, after his CA) had turned me down. It was much later, in 2016, that they eventually came on board,” he says.

Today, Eruditus and Emeritus (its online wing) make Ivy League education accessible and affordable to those who seek it, having tied-up MIT, Harvard, Columbia, Berkeley etc. INSEAD was the first school they tied-up with. INSEAD was offering an MBA out of their Singapore campus. That e-MBA was costing $90,000. Once Ashwin and Chaitanya were able to slash the fee down to $25,000 for a non-degree version of that e-MBA, 55 students enrolled. “That was like the a-ha moment for me,” says Ashwin.

In 2015, when they went online with Emeritus, and Ashwin and Chaitanya were ready to raise funds. An amount of $4 million was what they had in mind, but they could only raise $1 million. At least 20 investors had turned them down. “Are you a promoter or an entrepreneur? You look more like a promoter. We back entrepreneurs,” one of the investors said. “Well, what’s the difference,” Ashwin wondered. However, these taunts didn’t deter him.

After his bitter experiences with co-founders at Travelguru, Ashwin thought of asking Chaitanya whether he was prepared to sign a founder’s agreement. The normally unflappable Chaitanya was surprised, when that question was popped. He didn’t understand why that was needed. Finally, Chaitanya agreed to sign up but Ashwin says they never had to revisit that agreement again.

The Backstory

When you don’t come from a family of entrepreneurs, optimism and tenacity become key allies especially when trying to build a business at scale. Those qualities came in handy for Ashwin Damera when his first company, Travelguru, was facing stiff headwinds. That was the time when the economic recession of 2007-08 was sweeping across the world shutting businesses down. The Mumbai terror attacks added to the misery and travel business was on its knees. One of the investors wanted Ashwin out of the company, blaming him for the business downturn. This triggered a series of events which eventually led to the company being sold and Ashwin had to move on.

Today he feels vindicated. “In a way the investor (who had said his business amounted to nothing) was right. I’m thankful for the experience. Today, I run a successful business, operating in a sphere I like.”

Born in Chennai, Ashwin was academically driven. After completing his chartered accountancy, he joined Citibank where he worked for five years and looked set for a lifelong banking career. That’s when he got the opportunity to join the Harvard Business School (HBS) and that was like a turning point in his life. This is where learned that education can be transformational. The network, alumni, knowledge and high-quality peers together elevated him into a different zone. He even got to intern with the JetBlue CEO. His time at HBS convinced him to become an entrepreneur.

During his final year at HBS, Ashwin entered a business plan contest and came up with the idea of Travelguru, which eventually became his first start-up. He came up second in the contest.

“Here’s the great thing with Ivy League education. There are friends who could write you a cheque to help you start up and that’s what happened,” says Ashwin. A couple of mates gave him $200,000 as seed fund. He wasn’t entirely sure whether he wanted to start-up but somehow it felt like this opportunity may not come back again. That’s when he decided to return to India in 2005 to run Travelguru up until 2010.

“When I told my parents that I would like to become an entrepreneur they were quite shocked. They probably thought I would join McKinsey in New York. But I felt why not take the risk. What’s the worst that can happen? I still have my education as an insurance.”

The Road Ahead

The co-founders bring complementary skills to the table. “Having worked at INSEAD Chaitanya understands the education part of the business. I bring the digital expertise and look to build scale,” says Ashwin, who is now 43 years of age.

The company had posted revenues of $175 million in FY21 and in FY22 the run rate is projecting $505 million, says Ashwin. To get a sense of the growth it may be noted that revenue in 2017 had stood at $11 million.The objective now is to have one million students in FY25. Last year, they had 100,000 students which scaled to 250,000 this year. “There are 20,000 universities in the world. We are working with 55 of them,” he says, pointing to the growth potential.

Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Darlington Jose Hector is a Senior Journalist
first published: Jan 17, 2022 04:53 pm
ISO 27001 - BSI Assurance Mark