upGrad raises $210 mn funding, eyes acquisitions in US, Southeast Asia

Ronnie Screwvala-led edtech unicorn upGrad said it has raised a funding of $210 million from marquee investors and Family Offices who join the company cap-table.

This round has witnessed participation from ETS Global (world’s largest TOEFL & GRE Test Leader), Bodhi Tree (a JV of James Murdoch & Uday Shankar), Singapore's Kaizen Management Advisors Pvt. Ltd, Family office of Bharti Airtel, Narotam Sekhsaria Family Office (Ambuja Cements and ACC), and Artian Investments (Family Office of Lakshmi Mittal - ArcelorMittal) along with existing investors Temasek, IFC and IIFL. 

The funding has helped the firm double its valuation to $2.25 billion, according to the sources. Founder Group also invested $12.5 million in this round to maintain their over 50 per cent ownership in upGrad.

“upGrad in the last 12 months has re-shaped itself to be the most integrated company in this space with career opportunities for college learners and working professionals from the age of 18 to 58 and will be a lifelong learning partner for millions in the coming years,” said upGrad Co-founders, Ronnie Screwvala and Mayank Kumar. “We have always been very capital efficient while growing 100 per cent year-on-year and hope to retain that discipline.”

upGrad team strength will grow to 7600 from the present 4800 in the next 3 months. The team will also include about 170 full-time faculty, 1600 teachers, and over 5000 on-contract coaches and mentors.

Bucking the slowdown trend within the sector, upGrad said it has remained bullish with its program completion rate of 80 per cent. About 40 per cent of the company's total revenue is realized from Repeats and Referrals year-on-year. upGrad is on track to record annual gross revenue of $400-500 million during FY23 out of which about 45 per cent of total revenue will be realised from its own-branded online courses and programs.

In the edtech space, upGrad competes with players such as Simplilearn, Unacademy, Byju’s and Amazon Academy. Experts said the funding is helping the firm to fuel its  M&A (mergers and acquisitions) strategy where it is in negotiations to acquire various companies in markets such as the US and Southeast Asia for expansion in those regions.

For instance, last month upGrad acquired online learning institution Harappa Education for Rs 300 crore (about $38 million). The other acquisitions this year include Wolves India, Insofe and Work Better. The firm which has been mainly focusing on upskilling working professionals is now also scaling up its operations to focus on learners in India’s hinterlands or Bharat. It recently acquired Exampur - one of India’s largest test-prep providers for government jobs. The deal is valued at about Rs 125 crore, according to the sources. Exampur looks to close revenue of Rs 70 crore this fiscal.

After three consecutive quarters of raising more than $10 billion, the total funding in the Indian start-up ecosystem fell by 40 per cent during Q2 CY22 to reach $6.8 billion.  The decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability, as per the PwC India report titled, “Startup Deals Tracker - Q2 CY22.” Software as a service (SaaS) and FinTech companies had the highest share of funding in Q2 CY22, totalling more than $3.1 billion.

“We expect the overall funding landscape to take 12–18 months to stabilise, during which it would be beneficial for startups to increase their ‘funding runway',” said Amit Nawka, Partner - Deals & India Startups Leader, PwC India.