Tiger Global invests $200 million in BYJU's; valuation jumps to $8 billion

January 10th, 2020

By Nandita Mathur and Salman SH


NEW DELHI/BENGALURU : New York-based hedge fund Tiger Global Management will invest $200 million in Think and Learn Pvt. Ltd, the education technology firm that owns and operates learning app Byju’s, the startup said on Thursday. According to a person familiar with the matter, the investment will raise the valuation of India’s third-largest startup by around 45% to about $8 billion.

Tiger Global’s latest investment is a standalone funding, unlike previous rounds when multiple investors had together bought into Byju’s. Its last round of funding saw a $150 million infusion led by Qatar Investment Authority in July last year, the person cited above said on condition of anonymity.

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

“We are happy to partner with a strong investor like Tiger Global Management. They share our sense of purpose and this partnership will advance our long-term vision of creating an impact by changing the way students learn," founder & CEO Byju Raveendran said in a statement.

Tiger Global is one of the most active investors in the consumer Internet space, and in India, it has backed around 14 firms till date.

The investment company has also started focusing on the business-to-business (B2B) segment and recently invested $90 million in agri-tech startup Ninjacart. It has also invested in firms such as NestAway, Grofers, and payments startup Razorpay.

Raveendran, a former school teacher, was one of the early entrants into the online learning space in India when he started the firm. Byju’s learning apps offer programmes spanning kindergarten to higher secondary school grade students.

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

Its registered users have proliferated to 42 million, while it has another 3 million paid subscribers, a level which should enable the company and its subsidiaries to break into profits soon, according to industry officials.

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

Founder Raveendran said that the company is on track to double its revenue to ₹3,000 crore in the current financial year, and that it is working on programmes in Indian languages to make them accessible for learners in smaller towns. Additionally, the startup will launch ‘Byju’s Online Tutoring’ in the coming months.

Despite its positive track record, the company faces a number of challenges, an analyst said.

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

“While the number of registered users may be growing, it is the percentage of renewals that matters. A lot of learners tend to drop out,” Gogia said.

“Secondly, the content assumes a certain standard of knowledge, thus the applicability of the content needs to be improved,” Gogia added. “For instance, the level of all sixth grade students may not be the same, but the content is standard.”

Byju’s needs to improve its engagement with students as it “has not figured out individual learning paths,” the analyst said.

Scott Schlifer, partner at Tiger Global, said the firm is bullish on the company as it “has emerged as the leader in the Indian education-tech sector” and is “pioneering technology shaping the future of learning for millions of school students in India”.

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