UpGrad valued at $2.25 billion in latest round of funding

UpGrad, the largest online higher education provider in India, has raised $210 million in a new investment round from notable investors.

August 08, 2022 8:51 IST | India Infoline News Service

Although the company made no official comments regarding the valuation, it is believed that the round valued the company at $2.25 billion. This occurs at a time when several edtech businesses are experiencing a funding shortage and have even lately let go of staff members.

Temasek, IFC, and IIFL, who were already investors, contributed to the round proportionately.

In addition to ETS Global, Bodhi Tree (a partnership between James Murdoch and the former chairman of Star India, Uday Shankar), and Singapore's Kaizen Management Advisors Pvt Ltd., the family offices of Bharti Airtel's Mittals, Narotam Sekhsaria, and Lakshmi Mittal of ArcelorMittal have also joined the cap-table.

The upGrad founder group, which consists of co-founder and chair Ronnie Screwvala and managing director Mayank Kumar, has also contributed $12.5 million to the financing to keep a majority stake in the business.

The majority of the funds will be used by the corporation for acquisitions. Additionally, it is now finalizing deals with four more education companies, bringing its total to 12 businesses.

According to Ronnie Screwvala, co-founder and chairperson of upGrad, who owns slightly more than 50% of the business, "We are not one of the perpetual fundraisers in the edtech sector." "We only raise money when we believe it will be necessary for the upcoming capital project. Winters and summers are not things we believe in. We enjoy every season. Our fundraising effort is exactly what we need, not to "tank up,"

The company's total M&A expenditure would be $200 million once the proposed purchases were completed, he noted. The company had raised $160 million prior to this round.

The current round of financing will support both organic and inorganic growth for Grad.

The firm is making significant investments in its technological infrastructure, expanding its own content and intellectual property collection, building additional connections with esteemed organisations, and filling up any holes in its entire service portfolio by completing specialised acquisitions.

At a time when edtech companies are laying off employees, the edtech unicorn, or a privately owned company with a valuation of $1 billion or more, has been actively hiring. Its total workforce size has increased from 4,800 just three months ago to 7,600 as of this writing.

As opposed to the high dropout rates that plague many other edtech companies with a K-12 concentration, it has a completion rate of 85% and a return and referral rate of about 40%.

According to Screwvala, "for us, job transition, job promotion, and job increment are the foundation of our success in higher education."

The remaining purchases are all Indian businesses with a global focus, with the exception of upGrad's acquisition of Global Study Partner in Australia. The startup's FY22 revenue was over $250 million, and the management anticipates that FY23 sales would be close to $500 million.

In the future, the business might seek additional capital.

"Without outside funding, we spent five years building our business. UpGrad has a gross profit margin of 70%. This enables us to invest and advance. If we need to raise more money, it will depend on how eager we are to grow internationally, he added.

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