The latest round of $150 million funding from Qatar Investment Authority (QIA) — the sovereign wealth fund of Qatar – has helped ed-tech company Byju’s hit $6 billion valuation in about seven years, making its Founder and CEO Byju Raveendran the newest billionaire in the country.
With increased brand awareness and strong adoption among students, Byju’s tripled its revenue to Rs 1,430 crore in the financial year 2018-19 and also turned profitable on a full-year basis.
The latest deal conferred a value of $5.7 billion on the company in which Byju, a former classroom teacher who developed the education app, owns more than 21 per cent.
The Byju’s app founder grew up in a village on India’s southern coast where his parents were school-teachers. He was a reluctant pupil, playing hooky to frequent the football field, then learning on his own at home. He became an engineer and then began helping friends crack entry exams to top Indian engineering and management schools. The classes swelled till he finally began teaching thousands in sports stadiums, becoming a celebrity tutor who commuted between multiple cities during weekends.
He set up Think & Learn in 2011, offering online lessons before launching his main app in 2015. The business has signed up more than 35 million of whom about 2.4 million pay an annual fee of Rs 10,000 to Rs 12,000, helping it became profitable in the year ending March 2019. That was when Raveendran began courting long-term investors such as pension funds and sovereign wealth funds — his latest backer is the Qatar Investment Authority. In Byju’s latest funding round, the entrepreneur bought shares to maintain his equity level. Along with his wife and brother, the Raveendran clan now holds a total stake of about 35 per cent, said the people familiar, asking not to be quoted as the matter is private.
Byju’s approach is simple — captivate kids by transforming the content to fit short attention spans. Raveendran has always harboured ambitions to crack English-speaking countries, and has flown in YouTube stars to feature in his videos.
Byju’s own fortunes have climbed alongside the market. Its revenues are expected to more than double to Rs 3000 crore ($435 million) in the year ending March 2020, Raveendran said.
That pace of growth has already caught the eye of some of the industry’s biggest investors from Naspers Ventures and Tencent Holdings Ltd to Sequoia Capital and Facebook-founder Mark Zuckerberg and wife Priscilla Chan.
Its closing coincided with the announcement that the Byju’s app will team up with Walt Disney Co and take its service to American shores by early 2020.
The 37-year-old entrepreneur is taking his biggest step yet geographically and creatively. In his new app, Disney characters, from The Lion King’s Simba to Frozen’s Anna, will teach math and English to students from grades one through three. The same characters star in animated videos, games, stories and interactive quizzes.
“Kids everywhere relate to Disneys’ Simba or Moana, who grip kids attention before we take them through the loop of learning,” said Raveendran.
In Disney, he may have found a ready-made audience. All the lessons on the new service with Disney are set in the context of the entertainment giants classics and stay true to the narrative.
During a vacation in 2003, he decided to come to the IT city on the invitation from a friend who wanted his help with maths for the Common Admission Test (CAT). He taught around 12 of them, and interestingly four got through.
He returned to Bengaluru for a second time when those who didn’t qualify previously formed a group of 35 students and hired a place in Bengaluru’s Jyoti Nivas College campus.
After he began taking classes, the strength increased to 70 and then to 140. So then, they had to book the auditorium in the same college which had a capacity of 1,200, paying a huge fee.
By the sixth week, the auditorium was completely full with students mostly in the 21 to 26 age group. The whole thing began to look attractive financially — Raveendran typically charged around Rs 5,000 for seven workshops, each lasting a gruelling four hours.
In 2005, he decided to return to Bengaluru for good. This was the career he wanted to pursue.
Over the next couple of years, his classes — which became popular as Byju’s Classes — grew by leaps and bounds, He began travelling to other cities — including Pune, Chennai and Mumbai.
Interestingly, Byju’s first investor Ranjan Pai of the Manipal Group came on board after witnessing the rush outside a hotel near the Manipal Institute of Technology, where he was taking a group class for students who were appearing for various entrance exams, including the CAT.
Pai attended one of his lectures in 2013 pretending to be a student and was sold on the idea. He offered to invest in Byju’s.
Interestingly, Sequoia also came with an investment proposal after listening to a lecture Raveendran delivered at Bengaluru’s Kanteerava Indoor Stadium, but that happened some years later.
Meanwhile, as the number of students swelled, Raveendran started taking his classes in large indoor stadiums like the Indira Gandhi Indoor Stadium in Delhi, the Sardar Vallabhbhai Patel Indoor Stadium in Mumbai and Hyderabad’s Rajiv Gandhi Indoor Stadium.
“It was like teaching math in a festive atmosphere. The only difference was, instead of rock concerts, those were math concerts,” Raveendran showing a Rediff reporter one such video.
(With inputs from news agencies and news portals)