MUMBAI (NewsRise) -- An ambitious Indian startup that is using technology to supplement classroom teaching is drawing investment from major names as it plans to go global. Wednesday, Byju's said it has raised an undisclosed amount from Chinese Internet giant Tencent Holdings, just four months after receiving funds from Belgium's Verlinvest, an investment holding firm.
Tencent's infusion values Byju's at 50 billion rupees ($777 million), according to a person familiar with the matter. In all, the startup, which offers online tutorials, has received funds worth more than $200 million so far, according to estimates.
Previous investors in the company include marquee names such as Sequoia Capital, Belgium's Sofina and Chan Zuckerberg Initiative, which is Facebook founder Mark Zuckerberg's multi-billion-dollar philanthropy venture, and the World Bank's International Finance Corp.
Much of Byju's appeal for investors lies in its robust business model. The company was started in 2011 by Byju Raveendran, an engineer with a passion for teaching. Its tutorials for school students and programs for those preparing for competitive exams that are accessed through a multimedia smartphone app have so far attracted 9 million users and over 450,000 annual paid subscribers.
In the latest fiscal year ended March, the company, owned by Think & Learn, doubled its revenue to 2.60 billion rupees. It turned a profit in the just-ended quarter. Raveendran said in the statement that he expects the company to double its revenue again this fiscal year, and turn profitable on a full-year basis.
Byju's said it plans to use the funds from Tencent to accelerate product development for new markets and expand through acquisitions. In September, the company said it is looking to expand into the U.S., the U.K. and other Commonwealth countries.
So far this year, the Bengaluru-based company has already bought two companies - TutorVista and Edurite - for undisclosed amounts from British education firm Pearson. TutorVista gets 70% of its traffic from the U.S. Its services include test preparation and online coaching for students.
Companies specializing in educational technology, or edtech as it is often called, personalize content using cloud computing, big data and artificial intelligence to better engage with students. "It is the experience created by these companies that lures students to their mobile apps," said Avinash Devulapalli, senior consultant at Zinnov Consulting.
Investor interest in the sector has been surging over the past two years as more companies exploit the opportunities arising from the uneven quality of education, as well as the willingness of parents to spend heavily on learning. In 2016, venture capital firms invested $170 million in Indian education startups, a three-fold jump from the previous year, based on data from Zinnov.
According to Devulapalli, Byju's advantage is its ability to add scale. Its robust platform allows it to expand rapidly beyond English into vernacular content.
Investor interest in Byju's comes at a time when venture capital funding is recovering after a two-year lull caused by a greater focus on growth and profitability. According to a report published by KPMG-CB Insights earlier this month, India saw a major turnaround in venture capital activity during the second quarter ended June.
Venture capital investments in Indian startup companies spiked in January-March to nearly $2 billion, aided by a massive $1.4-billion fund raising exercise by ecommerce company Flipkart Internet, the report said. The investments tapered to $870 million in April-June, according to the report.
Investor interest in India has skyrocketed, particularly for deep technology solutions, while funding is also more readily available, the report said.
Tencent, which runs the hugely popular WeChat messaging app in China, has been actively investing in Indian startup companies although it has been less aggressive than e-commerce giant Alibaba Group Holding. Tencent's investments in the country include online healthcare platform Practo and Hike Messenger, the Indian equivalent of WeChat. In April, the company joined other major investors in infusing funds into Flipkart.
--Dhanya Ann Thoppil