Nine months after Byju's joined the unicorn club, the online education startup run by Think and Learn Pvt. Ltd. yesterday announced that it has $540 million in a funding round led by South Africa's Naspers Ventures. Canada Pension Plan Investment Board (CPPIB) and existing investor General Atlantic also participated in the round.
The fresh funding will drive innovation for tech-enabled learning products and also fuel Byju's plans for international market expansion, the company said in a statement. "We are happy to have prominent and long-term partners like Naspers and CPPIB on board with us. This partnership will strengthen our ability to deliver on our vision to build the world's largest education company," said Byju's founder and CEO Byju Raveendran.
According to The Economic Times, the transaction is expected to value the Bengaluru-based startup at around $3.6 billion - up from $1 billion earlier this year - making it one of the top-five most valued Internet companies in India and the world's most valued education technology firm. The transaction will also make the three-member founder group of Byju's, which includes Raveendran's wife Divya Gokulnath and brother Riju, dollar billionaires. Together, their 38% stake will be worth over Rs 9,300 crore.
Incidentally, Byju's is the most well-funded edu-tech player in the country, counting Tencent, Verlinvest, Sequoia Capital, Lightspeed Venture Partners, Chan-Zuckerberg Initiative and Aarin Capital (Manipal Group) among its investors. In fact, it was the first Asia investment by Facebook founder Mark Zuckerberg's philanthropic arm in September 2016. The latest funding round also includes a secondary share purchase by the incoming investors from its largest shareholder after the promoters, Sequoia.
The investor interest is understandable given the potential of the sector. According to a recent Research and Markets' report, the online education market in India is predicted to grow at a CAGR of 20.03% during the period 2018-2022.
The company is expected to kick-off its international expansion plans in the first half of next year with the launch of a learning application for children in the age group of three to eight. Apart from the home market, this product will target English-speaking markets like the US, UK and Australia. Byju's is reportedly also in talks to make some product acquisitions to help this product.
"Starting in India is a big advantage because it will be the largest market, even compared to China," Raveendran told the daily, adding that even as the company looks at international expansion it sees "infinite headroom for growth" in India. Earlier this year, it hired nearly 600 employees across product, content, tech and business development roles. Almost half of these new hires were on the sales side so as to attract more users in smaller cities and towns.
According to Raveendran, the company has been profitable since the start of 2018 and will post an annual profit in FY19, making it one of the rare profitable unicorns. He added that while near-term profitability is important for the company, its main focus continues to be on long-term sustainable growth.
Launched in 2015, Byju's has 30 million students cumulatively learning from its application and over 2 million annual paid subscriptions. In June this year, the company had said it has crossed Rs 100 crore in monthly revenue and had revised its revenue targets for this fiscal to Rs 1,400 crore. In fact, for the past three years, the company's revenue has been growing at 100% every year.
As part of the latest investment deal, Russell Dreisenstock, head of international investments at Naspers Ventures, will reportedly join the board of the company.
(Edited by Sushmita Choudhury Agarwal; with PTI inputs)