“Higher education is a $280 Bn market globally, and the fact that we are not only operating in one country, the depth of the market in our context is way higher. That’s also one of the contributing factors for the growth in our valuation,” Eruditus cofounder Ashwin Damera.
After spending more than a year courting investors, Chan Zuckerberg Initiative (CZI) finally made an investment in Eruditus earlier this month. Following its investment in BYJU’S, this was the second investment by the non-profit organisation headed by Facebook CEO Mark Zuckerberg and his wife Priscilla Chan.
While CZI has been tracking the edtech company for over an year, active discussion on investing in Eruditus started sometime before the Covid-19 outbreak in India earlier this year. Given the impact of Covid-19 on universities shutting down and moving classes online, Eruditus, which offers executive diplomas and other programmes from leading global universities, was well placed to grow. The company witnessed a 30% quarter-on-quarter growth during the past six months, according to reports.
Adding to this, Ashwin Damera cofounder of Eruditus said, “One of the biggest reasons for working with CZI is their focus on learning science and better learning outcomes. Beyond scale, we believe that education comes with high quality outcomes.”
Further, the Eruditus’ $113 Mn Series D round was led by Leeds Illuminate and Prosus Ventures (formerly Naspers). With the CZI investment and the latest round, the edtech startup’s valuation has almost doubled from $400 Mn to $800 Mn – $850 Mn. The company was valued at $400 Mn last January, after raising $40 Mn in Series C round led by Sequoia Capital India.
Varun Gupta from Avendus Capital, which acted as the financial advisor in the deal, told Inc42 that CZI evaluates an edtech platform on how it is using technology to improve learning outcomes vis-à-vis traditional modes of education and democratising high-quality education in emerging markets.
Talking about the strategic motivations behind onboarding these investors, Damera added that Prosus is the single largest shareholder in China’s Tencent and as the company is looking to expand to China, the VC’s knowledge and expertise in the market will be an asset to them, among other things. On the other hand, Leeds Illuminate managing director comes with an expertise in the online degree and higher education space, said Damera.
Eruditus, which was founded by Chaitanya Kalipatnapu and Damera in 2010, provides executive education programmes in association with global business schools such as MIT, Columbia, Harvard Business School, INSEAD, Tuck at Dartmouth, Wharton, UC Berkeley and London Business School. These programmes are held for six to eight months and can be available via on-campus, off-campus and online modes.
The company claims to have hit breakeven point in April-June quarter and is expecting to become profitable this year. “Our growth is going to accelerate in the coming years. We went from zero to $10 Mn revenue in about six years, $10Mn to $100Mn in three years, and this year we’ll add another $100Mn, taking our growth curve from $100Mn to $200Mn in one year,” said Damera.
$10 Mn To $100 Mn Annual Revenue
Like many other edtech companies, Eruditus too started its journey with offline courses and it was only around 2015, when it moved more and more of its courses online to shift to a completely online model (Emeritus). Even before Covid-19, 80% of the company’s revenue was said to be coming from online courses, which has now been accelerated.
Speaking to Inc42, cofounder Damera said, “The thing about online is if you bring a MIT or Cambridge course online — these are educational brands that are in-demand and recognised across the world.”
Soon Eruditus also realised that they can actually enroll global students for their courses given the target universities and this shifted the focus of the company from Indian classrooms to global classrooms. A major reason for Eruditus raising more institutional capital was to grow in this direction and create more momentum.
Today, Eruditus has offices in Singapore, Dubai, and Mexico City, San Francisco, Boston, in addition to India. Out of the total 650 Eruditus employees, 450 of them are based in India, while 65 people in Mexico, 30 people in China, 80 people in the US — enabling the global vision of the company.
Essentially, this change in mindset helped Eruditus expand its market depth. For instance, each course on the platform can now be marketed in 80-100 countries and be accessed in languages such as English, Spanish, Portuguese and Chinese.
India Makes 20% Of The Customer Base
Despite its initial focus on India, the US has emerged as the largest market for Eruditus in recent times, contributing around a third of all enrolments. Indian students make about 20% of their customer base and a third of them are female students. Plus, all students from India are working professionals and on average have about 5 to 10 years of work experience.
Damera told us that up to 70% of the Indian students hail from metros with the rest coming from Tier 2 cities. Predominantly, students are self-sponsored i.e. do not need direct financial assistance since most of them do have a master’s degree or diploma and some work experience.
These students are primarily enrolled in programmes offered by the likes of MIT Sloan, Columbia Business School Executive Education, and Tuck School of Business, Dartmouth among others. In India, Eruditius is working with IIM Calcutta, IIM Lucknow, XLRI , MICA, and IIT Bombay among others.
“It’s high quality education made accessible and affordable for people like us, who cannot go to IITs and take that artificial intelligence course. Because, it is only being offered to the students enrolled in the Computer Science course,” added Damera.
Eruditus has established a large learning science initiative in the company, where it tracks things like what kind of pedagogical tools lead to better outcomes. Post which, the instructional design team works closely with the course faculty to design the course, which usually takes about six months.
Leveraging Tech For Effective Online Education
This approach is clearly very different from other massive open online courses (MOOCs) platforms such as coursera and edX. According to Damera, by simply uploading the video lectures and reading material on the platform, one cannot expect the students to learn effectively. The company claims to have a 90% completion rate on their courses, which is considerably higher than the completion rate of other global platforms who have been struggling to boost their dropping completion rates.
In addition to the unique course design, the company also works on making the online courses more hands-on and practical with features such as practical case study, simulation, role plays and other similar pedagogies. But such learning pedagogies are easier to execute in a physical classroom, how does one make it work online?
“We had to build a lot of technology to make this happen. People log on at the same time, and then technology automatically puts them into different groups based on certain constraints. And then, people negotiate, discuss and come back. So though the content framework, and learning outcomes are similar, we adapted to the medium using technology,” Damera added.
Another example of such technological interventions are the multiplayer simulation games, for instance, a digital marketing student is learning to create a social media campaign on Facebook. So in the simulation, they will be given seven products and a budget to spend in marketing these products on Facebook. Certain variables are built into the simulation to define how things will play out. At the end of the simulation, students can then look at the various strategies used by their peers and also learn from them.
Course assignment results are also shared with the course tutor, who gets notified if a student is getting a low mark consistently. Then the course tutor may then reach out to this person and connect one on one to help with the problem areas.
“One of the beliefs that has always stayed with people is that somehow online education is inferior to classroom education. With these technology integrations, we are trying to prove that online education is better than classroom.”