Tiger Global invests BYJU’s $200 million; the value jumps to $8 billion

• The investment will increase the valuation of India’s third-largest startup by around 45% to around $8 billion.
• The company is on track to double its revenue in the current financial year to about ₹3,000 crores, Raveendran says.

Tiger Global Fund, based in New York, will invest $200 million in Think and Learn Pvt. Ltd, the Learning technology firm owned and operated by Byju’s learning app, the startup said on Thursday. The investment will raise the valuation of India’s third-largest startup by about 45 percent to about $8 billion, according to a person familiar with the matter.

The latest investment from Tiger Global is stand-alone financing, unlike previous rounds when multiple investors bought into Byju’s together. Its last funding round saw an infusion of $150 million led by the Qatar Investment Authority in July last year, the above-mentioned person said on anonymity condition.

Byju’s has raised approximately $995 million from investors like Naspers, Tencent, Verlinvest, Chan-Zuckerberg Initiative, Sequoia Capital, Lightspeed Venture Partners, and Aarin Capital since its founding in 2011.

“We are delighted to partner with a powerful Tiger Global Management investor. They share our sense of purpose and this partnership will accelerate our long-term dream of making an impact by changing the way students learn,” said in a statement founder & CEO Byju Raveendran.

Tiger Global is one of the most active investors in consumer internet space and has supported around 14 companies in India till date.

The investment firm has also begun to focus on the Business-to-Business (B2B) segment and has recently invested $90 million in Ninjacart’s agri-tech startup. It has also invested in companies like NestAway, Grofers, and Razorpay payment company.

Raveendran, a former school teacher, was one of the early entrants when he started the company into the online learning space in India. Byju’s learning apps offer kindergarten-wide programs for high school students.

The company’s apps target students for a variety of programs including competitive exams such as the Common Aptitude Test and the Indian Administrative Services entrance. The cost of such online courses ranges from ₹5,000 to ₹100,000.

Its registered users have risen to 42 million, while it has another 3 million paid subscribers, a level that, according to industry officials, will allow the company and its subsidiaries to break into profits early

Byju’s says that in the financial year ended March it turned profitable, with revenue tripling year-on-year to a crore of ₹1,480. However, the company still recorded a net loss of some ₹15 crores in FY19, including its subsidiaries, compared to a loss of some ₹37 crores in the previous fiscal year.

Founder Raveendran said the company is on track to double its revenue in the current financial year to about ₹3,000 crores and is working on Indian language programs to make it accessible to learners in smaller towns. Additionally, in the coming months, the startup will launch’ Byju’s Online Tutoring.’

The company faces a number of challenges despite its positive track record, an analyst said.

“The biggest issue facing Byju’s is customer acquisition and customer retention,” said Sanchit Vir Gogia, analyst and chief executive officer at Greyhound Research.

“While there may be an increasing number of registered users, the percentage of renewals is significant. Most learners have a tendency to drop out,” said Gogia.

“Secondly, the content assumes a certain knowledge standard, so it is necessary to improve the applicability of the content,” added Gogia. “For example, the level of all students in the sixth grade may not be the same, but the content is standard.”

Byju’s need to enhance student engagement as it “has not figured out individual learning paths,” the analyst said.

Scott Schlifer, Tiger Global’s partner, said the firm is optimistic about the company as it “has emerged as the leader in the Indian education technology sector” and is “pioneering technology that shapes the future of learning for millions of school students in India.”

According to the government-backed India Brand Equity Foundation, India’s online learning market is expected to double to $5.7 billion by 2020.