Biz fundamentals rekindling investor confidence in edtech: Eruditus CEO

The company has seen 40 per cent growth in university partnerships over the past four years and doubled its enterprise business in the last two years

The Indian edtech sector has been slower than others to recover from the funding winter, yet companies with strong business fundamentals and stable management teams are reigniting investor confidence in the space, according to Ashwin Damera, co-founder and CEO of executive education firm Eruditus.

 

The company expects to turn profitable as early as this financial year, and will complete the reverse flipping process, and move its domicile from Singapore to India in the next calendar year, after which it will roll out an initial public offering (IPO).

 

“Normally, it comes down to business fundamentals. But there is also a second factor, which is the quality and integrity of the management team,” Damera told Business Standard.

 

He added, “This is now our 14th year of running the business, and we are very referenceable because we already have a lot of marquee investors on the cap table. So, in light of all that has happened in education, the quality and integrity of the team matter a lot.”

 

The company has had 40 per cent growth in university partnerships in the last four years and doubled the enterprise business in the last two years.

 

Eruditus continues to invest and launch new programs and formats with the existing partners and expand the portfolio of high-quality education partners globally, said the company.

 

Furthermore, Damera is of the view that the company’s growth prospects are also setting it apart from its competitors.

 

Eruditus operates in the executive education segment, where it has partnered with around 80 universities to offer short courses, degree programs, professional certificates, and senior executive programs to its users.

 

In what was the second large edtech funding round this year, Eruditus recently raised $150 million in Series-F funding led by TPG’s The Rise Fund, at a $3.2 billion valuation. This came after Noida-based Physics Wallah (PW) closed a massive $210 million Series-B funding round at a valuation of $2.8 billion last month.

 

Eruditus plans to use the freshly raised funds for expansion — primarily through partnerships with more universities, scaling its enterprise customers (which currently contribute 15 per cent to the business), and penetrating deeper into the Indian market.

 

This comes at a time when the Indian edtech sector is going through a rough patch. Edtech startups raised only $138 million across 21 deals during the first half of 2024, a sharp fall from $456 million in 2023, $2.3 billion in 2022, and $5.8 billion in 2021, as per data compiled by The Kredible.

 

Meanwhile, edtech major Byju’s — once the poster child of the Indian startup world — has seen its fortunes dwindle due to a spate of regulatory issues and disputes with many investors, triggering the firm’s insolvency.

 

According to Damera, global investors are bullish on investing in companies that are exhibiting strong financial metrics — Eruditus turned earnings before interest, taxes, depreciation, and amortisation (Ebitda)-positive at Rs 80 crore on a full-year basis in FY24, and is expecting to achieve overall profitability as early as this financial year.

 

“We are expecting a 25-30 per cent year-on-year (Y-o-Y) growth in revenue this financial year. If I project for the next five years, we should be able to grow 25 per cent Y-o-Y, which would be a three-fold increase,” Damera said.

 

The company has begun the process of redomiciling in India, after which it will go for a public listing.

 

“We just closed our funding round last week and have now appointed consultants to get the redomiciling process started. We will hopefully get done next calendar year,” Damera said.

 

However, Eruditus is not the only edtech firm that is looking to go public. PW is also identifying investment banks as advisors for potentially India’s first edtech IPO in 2025, Business Standard had reported earlier this month.

 

According to Damera, India’s buoyant public markets are making edtech firms like Eruditus and PW bullish on listing in the country.

 

“There is a buoyant IPO market (in India). We believe that the Indian public market is also a little more patient in terms of their outlook… We are increasingly seeing India as one of the most attractive and fastest-growing education markets. So, it makes sense to go public in a market that, in the next five or six years, will be the largest,” Damera said.

 

Unacademy and Eruditus are the two largest firms in terms of valuation, followed by PW and UpGrad in the third and fourth spots, respectively. Byju’s, which was valued at $22 billion at its peak, has been ousted from the top five after it went into insolvency.