Exclusive: IFC to invest $15m equity in Indian edtech firm Byju’s ongoing round

Byju’s founder Byju Raveendran

International Finance Corp, the private sector lending arm of World Bank, has proposed to invest up to $15 million equity in education technology firm Byju’s as part of the company’s ongoing fundraising round.

Existing and new investors are also providing additional capital in the round, said IFC in a disclosure. It added that the proposed investment is closely aligned to the World Bank Group’s strategy for private sector education in India.

Recently, existing investor, Aarin Capital Partners MD Deepak Natraj, told DEALSTREETASIA that the investment firm has part-exited its investment in the Bangalore-based company run by Think and Learn Pvt. Ltd, which runs Byju’s. Aarin Capital and its founder Mohandas Pai had invested Rs 50 crore in the company and are believed to have earned a 10x return. In March, Byju’s raised $75 million from VC firm Sequoia Capital and Belgian investment firm Sofina.

Founded by Byju Raveendran in 2011, Bengaluru-based Byju’s offers learning programmes for class VI to XII students and preparation programmes for competitive exams. It offers its educational products in over 100 cities across India and parts of the Middle East.

“The company will use IFC’s funding to finance the expansion of its education services offering, further technology development and pursue inorganic growth opportunities,” IFC said in its disclosure.

At present, over 43 per cent of students on Byju’s platform are from outside India’s top-10 cities this is expected to increase to 60 per cent of sales over the next 5 years.

The company aims to use its strong technology platform to foray into international markets to provide K-12 educational content, bringing in revenues from the export of educational services. “With this fundraise, the company intends to expand coverage of its curriculum to include several subjects and grades,” it added.

At the time of its fund raising in March, Byju’s had outlined its plans to expand to the US, the UK and other commonwealth countries apart from India and Middle East.

Byju’s large investment has helped propel the investor interest in the ed tech sector.  As per data provided by Tracxn, in the first quarter of 2016, the ed-tech space has raised $77 million. Edtech has not been among the hot startup sectors in the last two years. Out of nearly $8 billion in venture funding in Indian startups last year, only $114.7 million went towards edtech companies.

Also, Toppr, which offers assessments and practice packages for competitive exams, raised $10 million in 2015 from Eight Roads Ventures, Helion Venture Partners and SAIF Partners, followed by a venture debt round of $2 million from InnoVen Capital.

The other category that is attracting investor interest is corporate training. Which is where startups like Simplilearn are positioned. They raised $15 million in Series C investment last year from Helion Venture Partners, Kalaari Capital and Mayfield Fund. UpGrad, co-founded by Ronnie Screwvala, is also in the same space, and received $15 million in funding last year. It has tied up with LetsVenture to offer courses in angel investing.

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