US-based Private Shares Fund cuts Eruditus’ fair value by 9%, effectively valuing it at $2.9 billion

Ashwin Damera, founder, CEO, Eruditus

US-based The Private Shares Fund, which invests in late-stage venture capital-backed startups, slashed the fair value of edtech unicorn Eruditus by 9 percent in the March quarter in another instance of an internal markdown of a technology firm by an asset management company.

The Private Shares Fund, which has a 0.2 percent stake in Eruditus, has pegged the fair value of its 36,264 shares at $4.66 million, effectively valuing the edtech at $2.9 billion, down from its previous valuation of $3.2 billion, the fund’s regulatory filings with the Securities and Exchange Commission (SEC) showed. The US-based fund had not marked down the fair value of Eruditus as of December 31, 2022, the filings showed.

According to a person with knowledge of the matter, The Private Shares Fund is an investor through a Special Purpose Vehicle (SPV) of one of Eruditus’ venture capital and private equity investors. As the fund holds a 0.2 percent stake, it will not get any information about Eruditus to assess its valuation, the sources said. Eruditus did not respond to Moneycontrol's queries.

Amid declining valuations of technology companies worldwide, The Private Shares Fund has joined the growing number of US-based asset management firms in reducing the fair values of Indian startups.

Besides Eruditus, food-tech firm Swiggy, ride-hailing platform Ola, fintech unicorn Pine Labs and online pharmacy Pharmeasy have witnessed have had their fair values slashed by US-based AMCs. Blackrock, the world’s biggest AMC, also halved the fair value of Byju’s, the world’s most-valued edtech firm.

The Private Shares Fund's decision to decrease the fair value of Eruditus in the Jnauary-March period is notable, considering that the startup achieved breakeven during the same quarter. In addition, Eruditus anticipates achieving profitability in the ongoing quarter (April-June) and has set its sights on becoming profitable based on bookings in the upcoming fiscal year. Eruditus follows a July-June financial year.

In April, Moneycontrol reported that Eruditus became the second-biggest revenue-grossing edtech with $250 million (about Rs 1,850 crore) in sales, registering a jump of 86 percent from its previous year’s revenue. But the company’s loss, on cash basis, also widened to $66 million in FY22 from $30 million in the previous year.

Founded in 2010 by Chaitanya Kalipatnapu and Ashwin Damera, Eruditus is a platform that provides executive-level programmes for working professionals. The company has raised a little more than $814 million in equity funding to date and counts SoftBank, Prosus, Sequoia Capital, Chan Zuckerberg Initiative, GSV Ventures among others as its backers. In August 2021, the company raised its largest-ever round of $650 million at a valuation of more than $3.2 billion.