DST Global Looks To Infuse $400 Mn In BYJU’S At $10.5 Bn Valuation

Billionaire Yuri Milner-led DST Global is reportedly in talks to invest $400 Mn in Indian edtech giant BYJU’S, valuing the company at $10.5 Bn. According to a Bloomberg report citing sources, the deal could be signed as early as this weekend.

With this transaction by DST Global, BYJU’S will be the second most valued Indian startup, and joining Alibaba-backed digital payments giant Paytm and OYO in the decacorn club. DST Global has also invested in high profile companies like Alibaba, Facebook, Twitter, along with Indian companies like Flipkart, Ola, Swiggy and Udaan, all of which are in the unicorn club.

The development comes a month after BYJU’S raised $23 Mn in Series F from Mary Meeker’s BOND Capital. According to the ministry of corporate affairs filings accessed by Inc42, BYJU’S recorded an approval to raise $23 Mn with 8,070 Series F preference shares at face value of INR 10 from Bond Capital Asia Holdings Limited. The company said it would utilise funds to meet the working capital and business expansion plans.

New Focus For Edtech

The fundraising comes at a time when BYJU’S is facing heavy competition from edtech startups amid rapid adoption of technology products and services for remote learning. Keeping this in mind, the Indian government has announced a forward-looking National Education Policy, which updates the 1986 policy and brings in some much-needed changes to back remote or digital learning. The National Education Policy (NEP), released on Wednesday (July 29), has a special focus on digital education and remote learning along with the question of equitable access to education given the digital divide in India.

The primary objective of the NEP 2020 is to bring in major reform in school education, where board exams will be low stakes and would test actual knowledge instead of rote learning. Schools will also have 360-degree holistic progress cards, track learning outcomes through a national assessment center called PARAKH and more. The policy also seeks to overhaul edtech in public colleges and schools to increase access for disadvantaged groups, while online learning content will be available in regional languages.

Will Edtech Growth Continue At Same Pace?

Edtech startups will need to review their models, course content and structure as well as subject matter itself in light of the new NEP 2020. Given this, the next few months would involve restructuring the learning modules according to the new policy. As of now, BYJU’s has over 57 Mn registered users and around 3.5 Mn paid subscribers. The company claims to have annual renewal rates of 85% and says it has doubled its revenue from INR 1430 Cr in FY19 to INR 2800 Cr in FY20. It has raised $1.4 Bn till date from investors such as General Atlantic, Tiger Global, Tencent, Naspers, Qatar Investment Authority, and Canada’s Pension Plan Investment Board (CPPIB) among others.

Besides BYJU’S, other edtech startups have seen massive growth and adoption in the past few months. According to SimilarWeb, based on a study of 35 top online learning platforms, the edtech segment saw a 26% increase in user visits between April 2019 to March 2020, as compared to April 2018 – March 2019. Further, the first 28 days of lockdown in India edtech segment saw 128.8 Mn visits (on average, 4.6Mn daily visits) as compared to 102.2 Mn average visits between April 2019 – Feb 2020.

As schools and colleges shifted to online classes and resources to continue educating students amid the pandemic, the engagement metrics of the segments have also improved. Bounce rate saw an improvement of 8.5% after lockdown and usage pattern also shifted from 68.29% mobile web users till February 2020 to 51.75% users on desktop during the lockdown.

According to the report, before Covid-19 lockdown, seven out of 10 top edtech players were focussed on school-level online learning. Vedantu, LearnCBSE, BYJU’S, Toppr, Tiwari Academy, Meritnation and Gradeup collectively captured 51.25% of the traffic share. In comparison, the two most popular test prep startups Unacademy and Embibe attracted 13.05% of the traffic. Udemy (9.29%) was the only massive open online courses (MOOC) platform to feature in the top 10 list.