Tiger Global-backed edtech unicorn Vedantu, on October 13, said it is strengthening its hybrid forays by buying a majority stake in offline test preparation platform Deeksha for $40 million. This comes at a time when demand for online classes is falling, compelling edtech companies to make a move towards hybrid learning.
"The move is to double down on our efforts on hybrid learning. This will also help Vedantu with its plans to achieve profitability as (Deeksha) is a healthy company. It adds positively to our IPO plans too," Vamsi Krishna, co-founder of Vedantu told Moneycontrol.
Krishna, in the interaction, added that acquiring Deeksha will also speed up Vedantu’s foray into a hybrid. "If we would have done it organically, it would have taken more years. Acquiring Deeksha, we felt we can do it faster and more efficiently," added Krishna, who is also the chief executive officer of Vedantu.
Also Read: How offline became the new online for India’s ed tech unicorns
Founded in 1998 by Sridhar G, Karnataka-based Deeksha is a test prep platform for the board and competitive exam coaching for students of grades 11 and 12. Deeksha said it currently has about 39 centres, across the southern states of Karnataka, Telangana, and Andhra Pradesh.
"Through this partnership, we will leverage Vedantu’s LIVE Class platform for our students and provide a hybrid solution that maximises learning outcomes through personalised learning algorithms… to millions of students in smaller towns and cities at an affordable cost," said Sridhar.
Krishna said Vedantu will work with Deeksha to scale in the three states where the latter has an offline footprint, and in time move to other cities. He added that Deeksha will continue to operate as a separate brand. "We don’t intend to kill the brand or merge it, the founding team will continue to operate it," he said.
The investment in Deeksha will bring about 13,000 students to Vedantu's platform, the unicorn said. Krishna added Deeksha’s network with schools and offline institutes will also help Vedantu scale its hybrid operations going forward.
Krishna said the strategy behind the acquisition is to move into tier three and four cities, providing hybrid learning without setting up centres for offline tutoring. "...to move into tier three and four cities. And to do a hybrid foray, not completely offline, but with a setup where the same master teacher teaches online in the presence of a local class co-ordinator," told Krishna.
Earlier in June, Vedantu opened its first hybrid learning centre branded as 'Vedantu Learning Center' in Muzaffarpur with the same model.
Krishna also said while there are no acquisitions in line, they are open to M&As (mergers and acquisitions) and will continue evaluating such options.
On October 12, Moneycontrol also reported that Vedantu has cut its monthly burn down to Rs 15-18 crore in the first quarter of FY23 from Rs 65-70 crore in the same period of FY22, according to a source. The company is now focusing more on profitability over growth and thus has also undertaken mass layoffs, the source said.
Vedantu has laid off over 700 employees since the start of this year, Moneycontrol had reported.
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