BYJU’s: The next big tech unicorn to curb the appetite for IPOs in the Indian Markets
BYJU’S is India’s biggest training organization and the maker of India’s most famous K-12 learning application, which offers profoundly versatile, drawing-in, and powerful learning programs for understudies. Revaluating how understudies learn in the time of cell phones, the BYJU’S approach consolidates top-notch instructors, demonstrated educational strategies, creative innovation, and information science to convey customized learning across grades. Byju’s likewise offers to instruct administrations for cutthroat tests, for example, JEE, NEET, CAT, IAS, and worldwide tests like GRE and GMAT.
The essential objective of BYJUs is to overcome any barrier between the Indian instruction framework and help the students love what they study. The showing content is conveyed to the understudies in different structures, for example, tests, activities, quizzes, and is considerably more than simply the hypothetical information.
BYJUs intention doesn’t just zero in on the students who are intrigued and spurred to learn rather centers around everybody, being unprejudiced. It is attempting to cause a circumstance where understudies step up of learning rather than the content being coddled to them.
Since India authorized a lockdown in the nation over in late March, closing schools and other public spots, Bangalore-settled start-up Byju’s has arisen as one of the quintessential stages for school-going understudies on the planet’s second-biggest web market. It took the start-up around four and a half years to gather 40 million understudies. Since the lockdown, its client base has expanded to 65 million.
Snapshots
Headquarters: Bangalore, India
Founded: 2011
Notable Investors: Blackstone, Blackrock, Ant Group, Tiger Global, T. Rowe Price, Silverlake
Last Funding Round: Series F (Nov 2019)
Amount: $ 1.5 Bn
Valuation: $15 Bn
Employees: 21,000+
Founder: Byju Raveendran and Divya Gokulnath
The market for fast-growing IT stocks
The education market in India as a whole is worth around $135 Bn with approximately 360 Mn learners. The Edtech segment of India is divided into 6 parts:
· Pre K-12
· K-12
· Test Preparation
· Higher education
· Continued learning
· B2B Edtech areas
The opportunity in the Edtech market is huge and Edtech startups are contending for a larger share of the pie. The Indian Edtech market investments in 2020 were led by big names like Byju’s, Unacademy, Toppr, etc. The market managed to garner $2.22 Bn funding in 2020 up from $553 Mn in 2019. Byju’s and Unacadmey have been the MVPs raisng over $1.64 Bn and $347.5 Mn. As there is a shift in methods of teaching there is an increase in focus on self paced learning and the idea of continued learning after college through professional courses this has been the driving force behind the innovations of the content is made and how it is delivered to the consumer. There are quite a few factors at play that led to the growth of investments in Edtech market. A major one being the increase in government spending allocation to the education sector from $ 11.3 Bn in 2018–19 to $ 13.2 Bn in 2020–21 and the launch of the National Education Policy this year. Another driver of growth is the increasing internet penetration in India especially in tier 3 and 4 cities
The pandemic fever
In just a matter of days, the pandemic forced people indoors that changed the way they worked and lived. Lockdown, though confining for the public at large was a gate opener for the Edtech market that was looking for a breakout in investor’s attention. An abundance of startups was able to benefit from the favorable conditions created in the market. Also, many new startups popped up across sub-segments to ride the Edtech wave this year. Large and small Edtech companies offering solutions for remote learning witnessed off-the-charts levels of activity — up by as much as 600%.
Global scenario and opportunities
Education has been one of the most traditional industries, however, that is changing in recent years we have seen applications of advanced technology in education and learning. Education is no longer only associated with the traditional classroom. The learning process now tends to leverage Edtech solutions like online classes, learning management systems, and others to make education more effective and accessible. The pandemic lead to further growth in demand for Edtech solutions sets the pace in the Edtech industry for many years to come.
China, with the largest education market in the world, has led education VC investment growth over the past five years. China now makes up over 60% of all Global VC investment in education, the USA 15%, India, 14%, and Europe 5% in 2020. While not as large, VC investment in Indian Edtech is worthy of note, growing almost 4x since 2018.
Is it undervalued or overvalued?
A plethora of investors and VCs back Byju’s, some of the most prominent names are The BlackStone Group, Blackrock, T. Rowe Price, etc. Byju’s raised approximately $1.55 Bn in its latest funding round Series F (Jun 2021) which increased its market valuation to $15.05 Bn
Byju’s most prominent competitors namely Vedantu, Unacademy and Toppr have an average Enterprise Value to Revenue Multiple close to 136x which is way higher than Byju’s 15x.
This shows that Byju’s is extremely undervalued as compared to its competitors. Keeping in mind the market leadership position of Byju’s and the huge user base in the long run its valuation will rise or has it already saturated?
Peer Comparison
Strategic partnerships
Over the years Byju’s have had numerous mergers and acquisitions, to name a few Vidyartha, Osmo, Labin App, WhiteHat Jr. and the most recent one Aakash Educational Services Ltd(AESL). With these acquisitions, all in edtech startups having their own niche offering, Byju’s is becoming on giant umbrella encompassing everything. The acquisition of WhiteHat Jr. aims to expand its product offerings, and widen its base in India, as well as the US where WhiteHatJr already has a presence. The latest acquisition of AESL, a leader in test prep services, brings together the best in offline and online learning. They aim to create India’s largest digitally enabled, omnichannel test preparation company.
The road ahead
Going forward Byju’s is planning to launch Byju’s Future School, the startup's international business, which will be led by Karan Bajaj, founder of WhitHat Jr., which Byju’s acquired last year. The company plans to expand internationally in U.S., U.K., Brazil, Indonesia, and Mexico next month and explore other geographies later this year. At launch, BYJU’S Future School will offer coding and math lessons. New subjects like Music, English and Fine Arts will be part of future plans. The company aims to reach 350mn users worldwide by FY 2022. The company is also piloting a model in India where schools are working with BYJU’S in imparting coding education within the school curriculum.
Conclusion
With the plans to expand its operation across cities and internationally, the company has the necessary funds for the expansion and investing in R&D of new methods of augmented learning through Artificial Intelligence, Machine Learning, and analytics. Banking on the massive subscriber base with the aim to expand it further, Byju’s will sure have data to feed its models and be able to provide truly customizable learning for each individual subscriber.
This article has been co-authored by Ayush Dugar and Khubaib Abdullah, who is in the Research and Insights team of Torre Capital.
For exclusive information about additional research and insights by our Analysts, kindly subscribe to Torre Capital’s Blog.
If you are an investor or shareholder and want more advice about the Pre-IPO secondary markets, please feel free to reach out at support@torre.capital for investment advice, or register for an account at Torre Capital.
