What comes after a unicorn? Indian online education startup Byju’s, which already reached the billion-dollar valuation from private investors in 2018, can now claim a new distinction: “decacorn.”
That’s the industry lingo for companies valued at $10 billion or more. It’s an ultra-exclusive club of two dozen companies across the world, according to CB Insights.
Byju’s is the newest member—thanks to an investment from technology investment firm Bond, which values the company at $10.5 billion, according to The Economic Times. The size of the investment was not disclosed; the Times said its sources estimated it to be less than $100 million.
The deal also welcomes Bond as the latest addition to Byju’s cadre of high-profile investors, which already includes Naspers, Sequoia Capital and Tencent. Bond was founded by Mary Meeker, a former partner at Kleiner Perkins whose annual “Internet Trends” reports have become a must-read for the technology industry.
Big checks have become a pattern for Byju’s, whose fundraising amounts and frequency have been staggering. Just in February, the Bengaluru-based company raised $200 million from existing investor General Atlantic. And that was just one month after it reportedly raised another $200 million from private equity firm Tiger Global. To date, Byju’s has raised about $1.5 billion.
Byju’s recent investors are among a growing number of “very large investors who are coming into education,” says Patrick Brothers, co-founder of education investment research firm HolonIQ. And as the COVID-19 pandemic has caused financial distress in many other industries, “education has emerged as a very interesting option for them to deploy capital in.”
Byju’s claims its online learning app, which offers instructional videos, live classes and practice questions, is now used by more than 57 million students. Perhaps more, the company says it is profitable, with over 3.5 million paying users who pay about $150 for an annual license. Its co-founder, Divya Gokulnath, told Business Insider that its revenue surpassed $370 million for the year ending in March 2020.
Founded in 2011, the company is named after its founder Byju Ravvendran, who previously worked as a private tutor. A combination of aggressive sales tactics, ads featuring Bollywood actors and high-profile events, including learning competitions in stadiums, helped propel its growth, according to company employees we spoke with for a profile of Byju’s last year.
But just as Byju’s is quick with raising money, the company also spends it fast. Case in point: Last September, it became the official sponsor of India’s cricket team (which comes with rights to put its logo on the players’ jerseys). The previous sponsor, whose contract Byju’s assumed, agreed to pay a reported $162 million for a five-year deal ending in March 2022.
Brothers notes that “with some of these mega rounds, the capital is immediately deployed for acquisitions.” Over the years, Byju’s has acquired several assets to shore up its offerings, including Edurite and TutorVista, from Pearson in 2017. Last year, it paid $120 million to purchase Osmo, a Palo Alto, Calif.-based developer of educational games for the iPad.
While Bond’s investment makes Byju’s the first “decacorn” in the global education technology industry, others are not far behind. Across the border, a handful of Chinese peers claim to be approaching the $10-billion valuation mark. They include Yuanfudao, which raised $1 billion in March in a deal led by Tencent Holdings and Hillhouse Capital Group that valued the company at $7.8 billion.
More recently, Zuoyebang, an online tutoring platform that spun out from Chinese search tech giant Baidu, has raised $750 million in a Series E round led by Fountainvest Partners and Tiger Global (the same firm that also backed Byju’s.) Prior to the deal, Reuters estimated the company was valued at $6.5 billion.
It’s no surprise to Brothers that Asia-based education technology companies are attracting the lion’s share of investments, particularly those that sell services directly to consumers. “Throughout Asia, families have a much higher willingness to pay for extra help to supplement their children’s education,” he says. Test prep, tutoring and homework help are common offerings among the most highly valued Asian education technology companies.
“These businesses are not really supporting the formal education system. They’re supplementing it,” says Brothers.
Education industry analysts say that trend is emerging in the U.S. as education companies are expanding their services to reach parents and students at home, especially as remote learning may continue into the new school year. Chegg, which offers online homework help and other support services for students, has seen its stock soar since the pandemic.
The highest-valued private U.S. edtech company is Udemy, an online course marketplace that reached a $2 billion valuation after raising $50 million from Japanese publisher Benesse in February.