Online teaching company Vedantu announced on September 29 it had raised $100 million in its Series E round of funding at a valuation of $1 billion, underlining investor desire in India’s booming ed-tech space and giving it resources to stave off larger opponents such as Byju’s and Unacademy.
Temasek-anchored impact investor ABC World Asia headed the round, and existing investors – 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. This year it’s also the 28th unicorn to appear out of India amidst the unprecedented funding boom.
Established by Vamsi Krishna, Pulkit Jain, Anand Prakash, and Saurabh Saxena in 2014, Vedantu currently presents live coaching classes for K-12 students, including for entrance exams such as IIT JEE Main and Advanced for engineering and NEET for medical colleges. It also gives lessons for CBSE and ICSE and many state boards, sample question papers, revision notes, mock tests, and past years’ papers.
Right now, it gets about 35 million monthly visitors on the platform, of which nearly 500,000 will be paying for Vedantu by the end of the year, CEO Krishna told.
The founding team members are alumni of IITs, who earlier founded Lakshya Institute, a test prep label that was 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 stated, continuing that Vedantu will eye initial public offering (IPO) in the stock markets in the next two and a half years or so.
It currently has a yearly revenue rate of $65 million, or about $5.4 million revenue a month.
How it fares against rivals
Vedantu previously raised $100 million, led by Coatue Management, in July 2020, at a $600 million valuation. Since then, fundraising hasn’t been smooth for Vedantu, compared to its rivals Byju’s and Unacademy, whose valuations have skyrocketed in the last 18 months.
Unacademy’s valuation has declined from $500 million in February 2020 to $3.4 billion currently, while Byju’s valuation has risen from $5 billion to $16.5 billion in the same period.
Despite the competition, Krishna spoke India can have 3-4 prominent ed-tech players because there are enough students. Unlike Byju’s and Unacademy, which have swiftly acquired smaller businesses in nearby categories, Vedantu also intends to stay focused on the K12 market, a strategy heading it apart from others.
Vedantu earlier said it was profitable on a contribution edge level, which means that its revenues cover all its variable costs, a step towards future profits. Vedantu said the latest round will settle over the next few weeks, with more investors entering in the following tranches. The Rainmaker Group worked as the exclusive financial advisor to Vedantu on their fundraising.