Edtech unicorn UpGrad raises $225 million in funding, doubles valuation

Edtech unicorn UpGrad raises $225 million in funding, doubles valuation
A cable TV-era entrepreneur created a unicorn in education technology and nearly doubled its value after raising $225m in new funding. This was despite a difficult global venture capital environment.
According to someone familiar with the transaction, India’s UpGrad Education Pvt was valued at $2.25B after a round that also included James Murdoch’s Lupa Systems LLC, a billionaire, and Educational Testing Service (US testing and assessment provider), according to Ronnie Screwvala. ETS administers standard tests such as the TOEFL (Test of English as a Foreign Language) or Graduate Record Examination (GRE).

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NSE -1.24% and existing investors, including Temasek Holdings Pte participated in the round. The person who requested anonymity because the details are confidential declined to identify themselves.

UpGrad bucks the trend in fundraising. After a temporary boost from the pandemic-induced school closings, many Indian edtech startups have shut down operations, laid-off employees, or cut back on expansion plans. Global venture capital investments have dropped as technology valuations have fallen this year.

India’s high-education and “upskilling” startups have done better than the competition by serving older customers who are looking for expertise or to pass the extremely competitive entry tests to India’s top engineering, medical, and business schools.

Screwvala, the chairman of the company, stated that India will be the world’s leading higher-education technology story. There is an insatiable global desire to upskill and upgrade to diplomas, degrees and doctorates. All of these have quantifiable outcomes like a new job or promotion.

Screwvala (65) confirmed the amount of funding but declined to comment about the valuation of investors. A request for information was sent to UpGrad via email. UpGrad did not respond. According to a source familiar with the plans, the funding round will increase by $100 million in a second close at higher valuations.

Screwvala founded a pioneering cable-TV company for India in the 1980s. It was a success story that led to the creation of a unicorn and was later acquired by Walt Disney Co. in a $1.2 billion valuation.

The founder of UpGrad stated that the company aims to generate $500 million in gross revenue for the year ending March 2023. He said that four-fifths will be made up of Indian college students and professionals, with the rest coming from overseas. However, it will take three years for domestic and international sales to even out.

The mumbai-based company offers a variety of services, including test prep, study abroad, undergrad degrees, and campus courses at 250 universities. It offers finance, law, and business courses for those aged 18-60. Screwvala, Mayank Kumar, and Phalgun Kompalli founded UpGrad to offer courses in entrepreneurship and data science. Together, the founders own 55% of the equity.

UpGrad courses cost between 50,000 rupees ($640), to 800,000. rupees and last for a few months to a few decades. The startup is expanding rapidly in India and Vietnam.

Screwvala stated that global edtech consolidation was possible and that he would build a $30 billion to $40 billion company. “We expect to have an IPO within two years for companies that are well-built. There’s no bad or good time for an IPO.”

 

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