Eruditus, an executive education startup, has secured $150 million in new funding, maintaining its valuation at $3.2 billion post-money. TPG Rise, an impact investment fund from the US-based private equity firm, led the round.
Current investors, including SoftBank Vision Fund 2, Leeds Illuminate, Accel, CPP Investments, and the Chan Zuckerberg Initiative, participated in this funding.
TPG Rise invested $100 million in Eruditus, while SoftBank contributed an additional $20 million. Eruditus has become the top Indian edtech firm by revenue, reaching Rs 3,800 crore in FY24. According to founder Ashwin Damera, the company is expected to surpass Rs 5,000 crore in revenue this fiscal year.
Damera also mentioned that the firm will begin shifting its domicile from Singapore to India.
Eruditus plans to move its domicile to India and join other Indian startups with holding companies in the US and Singapore.
Founder Ashwin Damera noted that this funding round took the longest to close. Global investors remain cautious about India’s edtech sector due to ongoing issues with Byju’s.
“Fiscal 25 – from July to June – will be nearly Rs 5,000 crore in revenue and we should do about Rs 300 crore in Ebitda,” he said.
“We just turned profitable in FY24 at an Ebitda level. A company of our size, I think we should keep some cash in hand—cash for M&A.”
Talking about key metrics like topline, Ebitda and growth, Damera said, “We are better today… We are talking about a company that will list maybe two years from now, whenever the timeline is set, but when we do, it will be at a way higher multiple.”
Following PhysicsWallah’s $210 million raise last month, this is the second significant deal in the edtech space. Meanwhile, Eruditus’ smaller competitor, Upgrad, is finalizing a $50-60 million round from existing investors.
Many edtech companies have shut down and returned capital to investors, while Byju’s continues to face challenges.
“This has been a longer fundraise than I expected,” Damera said.
“Also in this process, we learned a few things. One is that some of the guys who we thought were very keen have decided that they were either not investing in education or they will not invest in India for some time,” he said, indicating the broader concerns on investors’ minds around the sector.
“The second thing also from our perspective is that a lot of these are global investors. So, they also look at the comparables in the US… We had to spend a lot of time telling them that corporate governance here is very different from what you have experienced in other Indian companies,” he added.
Eruditus plans to use most of the latest funding for expansion. “Today, we are very much playing in what we call executive education,” Damera said. “What we are planning to do as we go along…is going to a level below, which will be post-grad, like at a master’s level, and then go one level below that, which is undergrad,” he said on expansion plans.
The company plans to invest in and expand its study-abroad business, launch more courses, and increase its university partnerships. It has around 80 university partners and aims to grow that number to 150 in the coming years.
“We will grow about 25 -30% year on year. Even at a conservative growth rate of 25%, we will be Rs 15,000 crore topline,” Damera said, adding this scale would be key for its IPO plans given it would also play a key role on the multiples it can get on revenue and Ebitda.
“Do you take 50x, which is where the market is today, or do you take 40 or 35, which is perhaps more reasonable?” he said.
Eruditus might use part of the new funding to manage some of its debt, though payments are scheduled over the next two years.
“We don’t need to repay our debt. Our debt is at the end of next year. So, there is no need to pay the debt as of today… Some amount of debt for a company our size is not bad,” Damera said.
