The co-founder of India’s most valuable education technology (Edtech) startup, Byju, has put his money where it counts.
Byju Raveendran, who is also the Bengaluru-based company’s CEO, has contributed US$400 million in a total US$800 million private funding round for the fast-growing company which is aiming at an initial public offering (IPO) within the next one year.
The remaining US$400 million was invested by Sumeru Ventures, Vitruvian Partners and BlackRock, among others.
This round values the startup at US$22 billion, according to market sources.
Raveendran’s stake in Byju’s parent company, Think & Learn Pvt, which was set up in 2011, will go up to around 25 percent, as a result of this funding round, people familiar with the deal said.
Reports say that Raveendran has been in talks with several banks to raise the amount to “boost investor interest at a time when valuations are under pressure”.
Raveendran said in a statement that the company “will continue to deliver accelerated growth in India and international markets “through both organic and inorganic initiatives”.
Mike Risman, managing partner of Vitruvian Partners, said Byju’s “strong growth and expansion in national and international markets” is very promising.
“We look forward to working with Byju as it builds on and accelerates its compelling growth trajectory," Risman said.
According to its fiscal 2020 results, as much 70 percent of revenue came from the sale of education tablets and SD cards, around 23 percent came from the sale of reference books and only seven percent came from tuition fees.
The Edtech startup, which claims to have more than 150 million users on its platform, has been on a company buying spree and is spending on new facilities after raising more than US$2.5 billion over the past couple of years.
It has acquired an Indian tutorial chain, Akash Education Services, in a cash and stock deal valued at nearly US$1 billion to give a push to its offline tuition centre business.
The company has launched 80 offline tuition centres across 23 Indian cities and is planning to add another 500 centres across 200 cities, as part of a US$200 million investment to grow its tuition centre business.
Byju has also made an aggressive foray into the US market buying companies like Epic and kids coding platform Tynker, spending over a billion dollars on the two deals.
Market analysts are of the view that while Raveendran’s decision to put in US$400 million in the latest funding round would be seen as a good show of faith by the founder just prior to an IPO, the risk factor for the banks goes up.
Much will depend on how the IPO performs since he has leveraged himself quite a bit with the bank loan for the invested amount, these sources added.
Media reports suggest that banks have given Byju’s planned IPO an estimated valuation in the range of US$40 billion to US$45 billion.
The company had initial plans to list in the US but people close to the deal say the company is having a rethink and could instead list on an Indian stock exchange.
