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Byju's raises US$ 50 million from Chan Zuckerberg Initiative, others

Livemint:  September 09, 2016

Bengaluru: Education technology start-up Byju’s, owned by Think and Learn Pvt. Ltd, on Thursday said it has raised $50 million from the Chan Zuckerberg Initiative, and existing investors Sequoia Capital, Belgian INVESTMENT FIRMSofina SA, Lightspeed Venture Partners and Times Internet Ltd. Byju also raised about $5 million in venture debt from InnoVen Capital in two tranches between September 2015 and March this year.

This is the first Asian investment for Chan Zuckerberg Initiative, a personal fund set up by Facebook Inc. founder Mark Zuckerberg and his wife Priscilla Chan. Vivian Wu at Chan Zuckerberg Initiative will join the company’s board. Sequoia Capital led the fundraising round.

The company, founded by Byju Raveendran in November 2011, first raised a Series A round of $9 million from Aarin Capital in September 2013, followed by a Series B round of $25 million from Sequoia Capital in July last year. The company went on to raise another $75 million in a Series C round from Sequoia Capital and Sofina in March this year.

Lightspeed Venture Partners invested about $20 million in the firm earlier this year in a secondary transaction, which saw Aarin Capital partially selling its stake.

The latest investment makes Byju’s the most well-capitalized education technology start-up in the country.

Byju provides learning programmes for class VI to XII students and preparation programmes for competitive examinations such as JEE, CAT, IAS, GRE and GMAT, among others.

The company will deploy the fresh funds to expand into global markets, especially in the US and UK, introduce new subjects beyond physics, chemistry, biology and mathematics as well as roll out products for classes IV and V.

“This investment was done keeping a couple of things in mind, primarily to get a good partner on board who can help us connect with the international market. We have already started developing products for the international markets. It will take us 12-15 months to complete,” said Raveendran.

With its app-based learning programme, Byju’s business model has undergone a significant change in the last one year, from a classroom-based model to an app-based one.

The company claims its app was downloaded more than 5.5 million times in the last one year, of which 250,000 consumers are paid annual subscribers.

The company, which clocked revenues of Rs120 crore in the year ended 31 March 2016, claims to have turned profitable in India. It claims it has already grossed more revenue between April and August than what it did the last fiscal.

“In India, we are profitable already. Last month, we did more than Rs30 crore in revenue and we are growing about 15% every month. In January, we were doing Rs15 crore in revenue and we have already doubled it. This year, growth will be better than last year,” Raveendran said.

According to Tracxn, a start-up tracker, as many as 271 online education start-ups were founded in 2014, which increased marginally to 293 in 2015. In 2014, about $28 million was invested in the sector across 32 deals, shows Tracxn data. In 2015, 47 deals worth $74.7 million were struck.

According to industry experts, while education technology start-ups may boast of a large user base, they might struggle to make them pay for the content.

According to Byju, about 5% of its overall app users are paid consumers.

“We have really good conversion rates. The good thing about the segment is, if they like the platform, they will continue for many years. We have a renewal rate of 90%, i.e, almost all students are continuing with the service,” he added.

The funding comes at a time when investors have become increasingly cautious about their bets.

Venture capital investment in the country plummeted 58% in the June quarter over the previous three-month period, according to a report by consulting firm KPMG and CB Insights. Venture capital firms ploughed $583 million into India in the April-June period, down from $1.4 billion in January-March, said the report.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.