Why has Byju raised over $ 1 billion in the last year and is already nearing another half a billion dollars in hedge? We’re getting some answers today.
Byju’s announced on Monday that it had acquired Aakash Educational Services, a 33-year-old chain of physical coaching centers, as the Indian online learning giant continues to consolidate its leadership position in the world’s second largest internet market and accelerate its offline growth.
The Indian startup, currently valued at $ 13 billion, paid “nearly $ 1 billion” in cash and equity for the acquisition (about $ 600 million in cash and balances), which is among the top three what matters in edtech is people who are familiar with the matter, said TechCrunch. (EY advised the companies on the transaction; Bloomberg first reported on the two companies, which spoke to each other in January.)
With the support of Blackstone, Aakash owns and operates more than 200 student tutoring centers nationwide for students preparing for students seeking to qualify for the best engineering and medical schools. The company looks after over 250,000 students.
The decade-old company has made some of its offerings available online in recent years, but the recent shift in the pandemic to student preferences has prompted Aakash and Byju to consider a deal six to seven months ago, company executives TechCrunch told a joint interview with. (They declined to comment on the financial aspects of the business.)
Aakash Chaudhry, executive director and co-promoter of Aakash Educational, said the two companies that combine will “provide very substantial and value-added services to students.” The management of Aakash Educational will remain with the company after the takeover.
The acquisition will allow the two companies to build the largest student omni-channel in India, he said. “Students who wanted access to physical classrooms got it from us. And those who wanted to access content and learn online were served by Byju’s. Together we will use the physical location and technology as well as online learning and offer the students a unique offer, ”he said.
The future of education will combine offline and online experiences, said Byju Raveendran, co-founder and managing director of the startup of the same name, in an interview. And Byju, a teacher himself (and pictured above), would know. Before launching the online platform, Raveendran took courses for hundreds of students in stadiums.
For some of Byjus offers such as test preparation, a purely online model is still a few years away. Monday’s deal also aims to expand Byju’s and Aakash Educational’s reach in smaller cities, executives said.
Amit Dixit, co-head of Asia Acquisitions and head of India Private Equity at Blackstone, who acquired a 37.5% stake in Aakash for around $ 183 million in 2019, said an “omni-channel” is the model for success the preparation and tutoring of tests and we look forward to being part of the partnership between the two leading companies in Indian additional training – Aakash and Byju’s. “
Funding from Indian education startups in recent years. (Image and data compiled by Blume Ventures)
Byju’s user base, which prepares students for courses for undergraduate and graduate students, has grown significantly since last year and now serves over 80 million users, of which 5.5 million are paying subscribers. Profitable company Byju’s had US sales of over $ 100 million last year, said Deborah Quazzo, managing partner of GSV Ventures (which supported the Indian startup), at a meeting of Indian venture fund Blume Ventures last month .
The startup, supported by Lightspeed Ventures and Naspers, has also tried to grow inorganically through acquisitions in recent years. In 2019, the US-based company acquired Osmo for $ 120 million, and last year it bought the child-centric coding platform WhiteHat Jr for $ 300 million. Ravendran said the startup wanted to acquire more companies. TechCrunch reported last week that Byju’s is in talks with California-based startup Epic to acquire the US startup for “well over $ 300 million.”
Jayanth Kolla, chief analyst at consulting firm Convergence Catalyst, said the acquisition of Aakash will raise Byjus brand awareness and reach more students. “The internet’s rapid organic growth is still plateauing after a point in a market like India,” he said.