[Funding alert] Vedantu confirms its Series E investment of $100M, enters unicorn club
Edtech startup, focussed on live online tutoring, has confirmed that it has raised $100 million in Series E funding led by Singapore-based impact investing fund ABC World Asia. The round also saw strong participation from existing investors – Coatue, Tiger Global, GGV Capital, and WestBridge among others.
With this latest round of funding, Vedantu’s valuation is at $1 billion, making it the newest unicorn in the block. The funds will be primarily used to strengthen product engineering functions as well as expanding into newer categories through both organic and inorganic routes.
The Rainmaker Group acted as the exclusive financial advisor to Vedantu on their fundraising.
The founders of Vedantu
On fund raising and unicorn status
In a conversation with YourStory's Shradha Sharma, Co-founder and CEO of Vedantu, Vamsi Krishna says,
"We haven't raised too much money and have always been conscious of our fund raises. Last year we had raised $100 million, and close to 50 percent of that is still in the bank. Also, our burn profile is different from others. The reasons for this fund raise is to get good partners and bring in deeper penetration in the market. While everyone talks about edtech today, the category still has a long way to go and is under penetrated."
Today, Vedantu's courses range from classes for young students - from 3 years old to 18 years old - to competitive exam preparations such as IIT-JEE, NEET, Commerce, CBSE, ICSE, and state exams such as Maharashtra Boards. Through its newest offering and fastest growing vertical, SuperKids, it offers extracurricular classes like English Speaking, Reading, and Coding.
Speaking of the unicorn status and what they believe their achievement to be, Vamsi says,
"While unicorn statuses are consequences and though an important milestone, but what I am really proud of is a million students learning online, and edtech becoming mainstream. I remember my first live class in 2014, and in those days it wasn't considered viable. We want to create a company that outlasts our lives and continues to innovate for decades to come."
This long term view, Vamsi believes, has helped them focus on the product, team, and culture of the organisation. He explains this also helped them in the early few years of building the edtech startup.
A long term view
Vamsi adds that from 2014 until 2017 was a phase of discovery, and many didn't even know the existence of live classes. "These four years were flat years, and it was tough to justify the efforts, and there are always a lot of questions. But things work out if you pursue it, and we saw this. From 2018 the momentum picked up, and our efforts were validated," he says.
In this period, Vedantu has come up with several first-time innovations that include WAVE, its proprietary LIVE teaching platform, and the 2-teacher model. Both these innovations are playing a big role in improving student outcomes for the company.
He explains, "If you believe in your idea and are doing something good, keep at it. Sometimes in short spurts things may be good or bad, but you need have a balance and need to be at it for the long term."
Some of the company's innovations have been granted patents in the US. The company looks to continue to innovate further on the LIVE teaching format and penetrate deeper in the K-12 segment by reaching more students.
Vamsi explains they have made quality teaching affordable and enabled it to reach masses. He adds that "education is a long cycle, and changes take time to manifest". It is also was one of the reason they looked at their marketing spends differently as well, he says.
"We can either spend on acquiring customers or building a stronger content resource pool, and live classes. We chose the latter. But the challenge is that it takes time. We started investing in this from 2016 onwards, what this has helped is that it gives us 35 million users organically, every month. This makes the total addressable market over 100 million. We have 65 million views on YouTube. And all this is organic," says Vamsi.
He says they do spend money on brand awareness, but the focus is more on seeding the community.
Buy vs build
Speaking on next steps with acquisition, Vamsi adds the team looks at organic and inorganic opportunities, and a few announcements are in line in 12-15 months. But these will depend on the company, synergies, and culture fit.
"It is easy to get distracted in a market like this, but what is important is to stay connected and focussed. We want to be ultra focussed on K-12 and want to build 10x better products and reach more students. Build products for different classes, languages, and subjects," says Vamsi.
Students also access Vedantu through its dedicated Channels on Airtel TV and TATA Sky. Vedantu catered to over 200,000 paying students last year, a 300 percent growth over the previous year. This growth was accompanied by a revenue increase of 4.5x over the previous year, making it the fastest growing online education company in this space and the overall second-largest company in K-12 in terms of revenue and number of students.
Sugandhi Matta, Chief Impact Officer, ABC World Asia, says in a note,
“Vedantu embodies our investment themes of providing better access to quality education and using digital technology to improve lives and livelihoods. 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."
She explains, "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. Vedantu's innovative platform empowers teachers who have delivered excellent results to offer personalised education to many students at once, creating the potential for impact at scale. We are pleased to partner with Vamsi and the Vedantu team as they continue to scale and shape learning outcomes for students in India.”
While the platform already has 48 students from different countries coming in, the team now is looking more closely at international expansion and growth in the next 12 months.
Vamsi concludes saying, "Reflection is an important part of any journey and milestones help you take stock of your journey. For me the most satisfying aspect of the journey is building and creating a category. It isn't just about Vedantu, if you can inspire a category to get created, then there is some impact."
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