Edtech startup upGrad set to join unicorn club with $4-billion valuation

Eyes $400 million at 5 times current value

Temasek-backed edtech startup upGrad is in talks with global private equity and venture capital investors to raise $400 million at a valuation of $4 billion, according to sources close to the development. This would mean almost a five-fold jump in the valuation of the Mumbai-based startup from the last fund-raise round earlier this year.    

The company is also planning to close two significant acquisitions—a global short-form course player and another in the executive education space--in the next two to three months.

Founded in 2015, the higher education and upskilling company has so far raised $160 million in two separate external rounds this year led by Temasek and IFC. At the last fund raise earlier this year, upGrad was valued at close to $850 million. The company was completely bootstrapped before this. 

When contacted, upGrad chairman and co-founder Ronnie Screwvala declined to comment on the fundraise. When asked about the acquisitions, their fourth and fifth so far, he said, “These are significant players who are going to add a lot of value to our group.”  

Commenting on the likely rise in valuation and the prospect of upGrad joining the unicorn club, he said, “We've got a lot going on our plate. So, obviously the next jump will happen substantially higher than a unicorn.”

With this round, the company is all set to join the likes of edtech players including BYJU’s and Unacademy and enter the unicorn club. Unacademy had become a unicorn last September when it raised $150 million in a round led by Japanese conglomerate SoftBank valuing it at $1.45 billion, a three-fold jump in just six months. BYJU’s, which has seen a meteoric rise in its valuation, has raised a total of $2.7 billion in funding over 18 rounds, according to Crunchbase data. It doubled its valuation from $8 billion in January 2020 to $16.5 billion in June this year, becoming the most valuable startup in the country, beating Paytm. Two other edtech startups-- Vedantu and Eruditus--  are eyening unicorn valuation this year.

upGrad is focusing on revenue growth and is looking at up to three times jump between Q1 and Q4 of FY22 in its topline numbers, which it expects to cross $500 million in annual revenue run rate. According to financial data accessed at business intelligence platform Tofler, the company’s losses had widened to Rs 79 crore in FY20 against Rs 43 crore in FY19. 

Founded by Screwvala, Mayank Kumar, Phalgun Kompalli, and Ravijot Chugh six years ago, upGrad had acquired recruitment and staffing solutions company Rekrut India and a Bengaluru-based coaching institute The Gate Academy last year. It has recently acquired video-enabled learning solutions platform Impartus and has committed over Rs 150 crore for the buyout and to invest in its growth.

It is targeting a revenue of Rs 400-600 crore from its five acquisitions, including the ones in short-term courses and executive education by FY23.

In the next six months, upGrad’s total addressable market will cross $100 billion, of which the working professionals’ market is placed at $8-10 billion, $5 billion covers the test preparation sector, $65 billion comprises the global working professionals and $20 billion covers short-form courses around the globe. Led by the US, international business will lead to 20 per cent revenue for the company by the end of FY22. The company has international presence in markets such as West Asia, Indonesia, Vietnam, Singapore, the UK and the US.