UpGrad, the online professional education startup, is up against some well-entrenched global and domestic rivals. That does not deter the two-and-a-half-year-old company from investing, acquiring and building partnerships to expand its reach as the founder group led by media industry veteran Ronnie Screwvala has committed to invest Rs 300 crore in this venture. UpGrad co-founder and managing director Mayank Kumar, a venture capitalist-turned-entrepreneur, shares the startup’s plans for acquisitions, revenue growth, international expansion and the IPO goal that is some years away. Excerpts:
From Coursera and Lynda to Udacity and Simplilearn, the online professional education segment is crowded. How do you differentiate from competitors?
The differentiation comes in the offline connect that we can create. For us, it was very clear how we provide a human touch to a lot of these things. Getting people to come together on a human environment is something we focus on. We have a dedicated team of teaching associates who would call you up and ask, ‘hey, why are you not logging in for some time?’ and a team of graders who gives grades on an on-going basis.
That human element is the biggest differentiator. It is a crowded space. Education in general is crowded but the market opportunity is big.
There is a commitment to invest Rs 300 crore.
Yes. Only less than Rs 100 crore has been spent. It is a large opportunity for us to go after. Higher education online hasn’t yet started. Something is happening in K-12. In higher education, all are starting. That is why we are in the investing phase.
The company has made it clear you would internally fund it. What is the vision from a business point of view?
From a business perspective, the goal is to take it to scale and float an initial public offering at the right time. Unless some strategic relations and partnerships come in we are not looking at venture capital investments.
We will fund it internally through the founder group and not look at any external funding.
You started a little over two years ago. How is the business picking up?
We are running a programme in collaboration with International Institute of Information Technology, Bangalore, which charges Rs 225,000. Right now, in the year of launch, we have trained about 1,000 people. That means, this single programme has given us revenue of about Rs 20 crore. That makes it the largest online analytics training programme in the country. If a single programme can give Rs 20-30 crore revenue, five or six of them can give you much more.
We are aiming for Rs 100 crore of gross revenue for 2017-18 and we are on track to achieve it. That means, we will see five-fold growth in revenue this year. We are announcing a partnership with BITS Pilani and a large premium education brand from abroad. We will partner with the best of international universities.
You mentioned about strategic relations. Are you looking at inorganic expansion?
An acquisition would be a very interesting route for us, be it in terms of new markets, new channels or new markets. Somebody in the career service market or someone who focuses on freelancing individuals would be very interesting. We did one acquihire last year and we are always on the lookout for such opportunities. In our mind, we have kept something like Rs 50 crore for acquisitions and acquihires etc.
Which are the new markets you are targeting?
The Middle East, Africa and Southeast Asia are three markets we are looking at. We will lay the foundation this year but next year we would see the real work on the international market.
How far are you from closing a buyout deal?
We are talking to a few companies for potential opportunities. We haven’t yet closed (any deal) but are actively looking at them.
What is the timeframe you are looking at to go public?
An IPO would happen when there is a predictability of business and revenue. Right now, we are far from there. It will take us five-six years to come to that stage. We have to scale revenues also much faster.
When do you expect to turn a profit?
Our data analytics programme is profitable while other programmes are yet to become profitable. Data analytics is our largest business. At an aggregate level, we are not yet profitable. Hopefully, by the last quarter of this financial year we should be profitable.
Like this interview? Sign up for our daily newsletter to get our top reports.