VC Firm 3one4 Capital Exits Edtech Startup Toddle With Over 6X Return

Venture Capital (VC) firm 3one4 Capital has exited early-stage edtech startup Toddle with a 6.6X return on its investment.

3one4 Capital, which invested around $200K-$250K in Toddle’s seed funding round in 2020, announced its exit in a LinkedIn post earlier this week, days after the startup bagged $17 Mn in its Series A funding round led by Sequoia Capital India.

The funding round, which took place earlier this month, also saw participation from Tenacity Ventures, Trifecta Capital, and other existing investors including Matrix Partners, Beenext, and Better Capital. 

Speaking to Inc42, Anurag Ramdasan, partner at 3one4 Capital, said that the exit was more about the VC firm’s economics and targets.

“It was from an older fund that has been closed out in terms of investment. So, we had a fair amount of clarity that we will not be participating in the further rounds in the company…” said Ramdasan.

“We are constantly balancing our portfolio and planning exit horizons per vintage. As with most top-tier VC firms, we are exiting 8-10 companies every year,” Ramdasan added.

Founded in 2019 by Deepanshu Arora, Gautam Arora, Nikhil Poonawala, Misbah Jafary, and Parita Parekh, Toddle is an education-focused SaaS platform. The startup claims to offer services to over 40,000 educators at more than 1,500 schools across some 100 countries. As per its former investor 3one4 Capital, Toddle’s growth trajectory has been quite steady.

In the social media post, 3one4 Capital said, “Toddle has also doubled its customer base every year. In 2019, it was at 50 paid schools. In 2021, it reached 400 paid schools and closed 2022 with 800 paying schools.” 

The VC firm added that since its entry, Toddle has grown 7X in ARR and achieved several milestones such as a 3X year-on-year (YoY) growth, an annual churn of only around 3%, onboarded over 800 customers across 100 countries, and securing a Net Promoter Score (NPS) exceeding 72.

Responding to a question, Ramdasan said that 3one4 Capital’s exit was not related to the ongoing funding winter and the overall pressure being faced by the edtech sector.

“In fact, in the entire edtech space, if you have to bet on one company, I would still say Toddle. They grew phenomenally. Also because it’s a SaaS player, it is actually one of the few sustainable edtech models out there,” said Ramdasan.

It is pertinent to note that Toddle has managed to attract new investments and provide over 6X return to 3one4 Capital at a time when most other edtech players in the country, including BYJU’S, Unacademy, Vedantu, and upGrad, have resorted to mass layoffs and other business restructuring measures.

With the overall startup funding declining 40% YoY in 2022, Indian edtech startups raised a total funding of $2.6 Bn in the year as against $4.7 Bn in 2021, as per Inc42 data. The edtech startups have also laid off almost 8,000 employees since last year.