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Vedantu raises $100m at $1b valuation, becomes India’s 5th edtech unicorn

Online tutoring firm Vedantu said on September 29 it had raised $100 million in its Series E round of funding at a valuation of $1 billion, underscoring investor appetite in India’s booming ed-tech space and giving it ammunition to stave off larger rivals such as Byju’s and Unacademy.

The round was led by Temasek-anchored impact investor ABC World Asia and existing backers – Coatue Management, Tiger Global, GGV Capital, Westbridge, and others investing. With this, Vedantu is now the 5th Indian ed-tech startup to enter the unicorn (a term used to refer to privately-held firms valued at a billion-dollar and more) club, after Byju’s, Unacademy, Eruditus, and UpGrad. It’s also the 28th unicorn to emerge out of India this year amidst the unprecedented funding boom.

Moneycontrol reported on August 23 that Vedantu is becoming a unicorn and raising money independently, rather than selling to Byju’s, as was rumored.

Founded by Vamsi Krishna, Pulkit Jain, Anand Prakash, and Saurabh Saxena in 2014, Vedantu currently provides live coaching classes for K12 students, including entrance exams as IIT JEE Main and Advanced for engineering and NEET for medical colleges. It also provides lessons for CBSE and ICSE and various state boards, sample question papers, revision notes, mock tests, and previous years’ papers.

It currently gets about 35 million monthly visitors on its platform, of which about 500,000 will be paying for Vedantu by the end of the year, CEO Krishna told Moneycontrol.

The founding team members are graduates of IITs, who previously founded Lakshya Institute, a test prep brand later sold to MT Educare.

“We still haven’t used 50% of the money from our last round (of $100 million). You can’t just raise money for the sake of raising,” Krishna said, adding that Vedantu will eye initial public offering (IPO) in the stock markets in the next two and a half years or so. Vedantu will also use the money for a few acquisitions in the K12 space.

It currently has an annual revenue rate of $65 million, or about $5.4 million revenue a month.

“In India, online education has the potential to extend the scope of ‘Right to Education’ to students in the underserved community and capture the ‘Next Half Billion’ income group, representing over half of the country’s student population. With EdTech experiencing meteoric growth in India, Vedantu as the pioneer and category creator in LIVE online tutoring, is driving the tectonic shift towards online learning,” Sugandhi Matta, Chief Impact Officer, ABC World Asia, said.

How it fares against peers

Vedantu 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.

Despite the competition, both for customers and investor dollars, Krishna said that because there are enough students, India can have 3-4 prominent ed-tech players. Unlike Byju’s and Unacademy, which have rapidly acquired smaller companies in adjacent categories, Vedantu also plans to stay focused on the K12 market, a strategy marking it apart from others.

Vedantu earlier said it was profitable on a contribution margin level, which means that its revenues cover all its variable costs, a step towards eventual profits.

Vedantu said the latest round would close over the next few weeks, with more investors joining subsequent tranches. The Rainmaker Group acted as the exclusive financial advisor to Vedantu on their fundraising.

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