Online learning firm Vedantu is in advanced talks to raise $100 million, valuing it at a billion dollars, post-money, as it is firmly proceeding with a fundraising, instead of a rumoured acquisition by Byju’s, sources said.
About $60 million will be contributed by existing investors -- Coatue Management, GGV Capital and Tiger Global Management -- while an Asian private equity fund is expected to invest $40 million, sources said. Moneycontrol could not immediately ascertain the new investor’s name.
Vedantu did not respond to an email seeking comment.
People close to the transaction insisted that Vedantu never held a conversation with Byju’s, putting an end to acquisition rumours reported by Entrackr earlier this month. CEO Vamsi Krishna also strongly denied the development in the report and in subsequent interviews, saying that building out Vedantu independently was his priority.
Vedantu to be fifth online education unicorn
The deal will make Vedantu India’s fifth online education unicorn, after Byju’s, Unacademy, UpGrad and Erudtius. Unicorns are privately held companies valued at over a billion dollars.
Founded by Krishna, Pulkit Jain, Anand Prakash and Saurabh Saxena in 2011, Vedantu currently provides live coaching classes for K12 students, including for entrance exams such as IIT JEE Main and Advanced for engineering and NEET for medical colleges.
It provides classes for CBSE and ICSE as well as various state boards, sample question papers, revision notes, mock tests and previous years’ papers. Vedantu said, in May, it has 27 million monthly visitors on its website and 68 million monthly views on YouTube.
Monthly revenue of Rs 35 crore
Many of these customers use Vedantu’s products for free but the scale indicates its growing popularity. It has 200,000 paid subscribers, which has grown by four times in the last one year, driven by students learning virtually during the pandemic as offline education centres were closed.
As of May 2021, Vedantu said its revenue grew four times in the previous year, and had an annual revenue run rate of $60 million or a monthly revenue of $5 million (Rs 35 crore) for May 2021. To put this in context, Aakash, one of India’s oldest and biggest offline coaching centres, had a monthly revenue of about Rs 100 crore in FY20.
How it fares against peers
It last raised $100 million, led by Coatue Management in July 2020, valuing it at $600 million. Since then, fundraising hasn’t been easy for Vedantu, compared to its peers Byju’s and Unacademy, whose valuations have skyrocketed in the last 18 months.
Unacademy’s valuation has gone from $500 million in February 2020 to $3.4 billion currently, while Byju’s valuation has gone from $5 billion to $16.5 billion in the same period.
“Investors want to pick a company that’s well capitalised and is a market leader. Vedantu faces direct competition from Byju’s and broader competition from Unacademy. But closing this round should let them see another day, given that their cost structure has also become more efficient,” said one person tracking the company.
Vedantu earlier said it is profitable on a contribution margin level, which means that its revenues cover all its variable costs, a step towards eventual profits.