Indian online higher education company upGrad has raised $120 Mn from Temasek, a global investment company headquartered in Singapore. This is the edtech company’s first external equity funding round since being founded in 2015.
The company will use the funds to scale its operations in international markets, pursue mergers and acquisitions in the edtech space and expand its graduate and postgraduate degree portfolio. The company aims to achieve revenue worth $2 Bn by 2026.
Founded by Ronnie Screwvala, Mayank Kumar, Phalgun Kompalli and Ravijot Chugh, upGrad offers higher education courses in collaboration with various universities. It claims to have a million users globally, of which 45,000 are paid learners. In 2020, upGrad acquired recruitment and staffing solutions company Rekrut India and Bengaluru-based coaching institute The Gate Academy (TGA). In August last year, the company raised INR 50 Cr debt from IIFL Income Opportunities Fund.
“This capital will further fuel our commitment towards global expansion as well as deeper India penetration, as we march forward with our goal of making India the teaching capital of the world,” said upGrad’s founders in a joint statement.
In the fiscal year ended March 2020 (FY20), upGrad’s revenue increased by 95%, from INR 85 Cr in FY19 to INR 163 Cr in FY20. However, the healthy increase in revenue was offset by an 87% growth in the company’s expenses, from INR 129 Cr in FY19 to INR 241 Cr, leading to an 84% increase in the company’s net loss to INR 79 Cr.
The company earns revenue from three streams — student fees for the various courses, revenue from the universities for the various programs run on their behalf and revenue from the enterprise programs.
Indian Edtech Sector: A $10 Bn Opportunity
With a market size of $2.8 Bn in 2020, the Indian edtech sector is expected to grow at a compound annual growth rate (CAGR) of 39% to reach a market size of $10.4 Bn by 2025, highlights an Inc42 Plus report, “The Future Of Edtech In India: Decoding the $10 Bn Market Opportunity”. Some of the major factors driving the adoption of edtech apps in India will be convenience and cost-efficiency of the products and services, a surge in out-of-pocket expenditure on education and a rise in course fees.
Test preparation, K12 learning, online certification and skill development are expected to be the major drivers of demand for Indian edtech startups in the coming years.