When Krishna Kumar started a personal blog in 2009 and posted free video lessons and a practice test there, the idea wasn’t to do business.
It was to kill boredom.
Six years later, the blog has become Simplilearn Solutions Pvt. Ltd, a leading education start-up, employing 450 people and training 20,000 people every month on the back of $28 million it has raised from multiple funds. The company trains IT professionals online to help them earn certifications in areas like project management and analytics.
Earlier, Simplilearn operated offline centres, but moved completely online in the last year. “Post moving to the online model, our costs have moved down a little bit, but we’ve also been able to increase the payouts and benefits that we provide to our trainers in order to attract and retain the best trainers from across the globe,” said Kumar, chief executive officer of Simplilearn.
However, online does not mean cheap. Each hour of video costs about Rs.2 lakh to produce, with shelf life for each being about just six months, as technologies constantly evolve.
Venture firms backing the Bengaluru-based start-up include Mayfield Fund, Kalaari Capital and Helion Venture Partners. Its most recent fund-raising round of $15 million in April last year enabled it to buy Silicon Valley-based digital marketing training company Market Motive for $10 million, enhancing its portfolio of about 250 courses to cater to a fast-growing digital marketing field.
According to documents filed with the Registrar of Companies (RoC), the firm reported an increase in revenue of 10% for the year ended 31 March 2015 to Rs.51.8 crore in fiscal 2015 from Rs.47.02 crore a year earlier, while losses widened by more than five times to Rs.30.16 crore until March from Rs.4.68 crore in the year-ago period. These numbers reflect Simplilearn’s aggressive investments to create course content and expand its portfolio.
Experts say this is not unusual for a company in the education sector.
“Typically what happens in education companies is they have to invest ahead of their market. You make investments in terms of developing course content, you make investments in terms of acquiring trainers, marketing and sales expenses and building a brand, and all of these get offset as losses,” said Anand Sudarshan, founder, Sylvant Advisors, an education advisory firm, which currently incubates 19 education start-ups.
Simplilearn, which has subsidiaries in the US, Australia and Singapore, claims the RoC numbers represent only 30% of its overall revenue, with the rest coming from other regions. It competes with global companies such as Lynda.com (which LinkedIn Corp. bought for $1.5 billion), Udemy Inc. (which raised about $113 million so far), Udacity Inc. (which raised about $160 million) and Indian start-ups such as U Education Management Pvt. Ltd-run UpGrad (which raised $15 million) as well.
The company follows a differentiated pricing strategy for different regions. For instance, a Big Data course that costs about Rs.20,000 in India could cost $1,000 in the US.
“Our courses result into a certification. If you want to become Android certified by Google, you should come to us because we will teach you how to learn Android as well as how to write the Android exam that is conducted by Google. Learn Android, pass the test. If you don’t, get the money back,” Kumar said.
Going forward, Simplilearn is looking to focus on expanding its tie-ups with corporations as well as enhancing its revenues from B2B (business-to-business) operations.