After reports today said that edtech firm Byju’s was close to buying Vedantu for up to $800 million, the latter’s co-founder and chief executive Vamsi Krishna came out objecting to the rumours that the live tutoring startup was on the block. Moreover, in an interview, Krishna termed all such news as “unnecessary distraction” for the company which rivals Byju’s in the live tutoring space for the kindergarten to 12th standard (K-12) segment in India.
He asserted that Vedantu is not up for sale--at least for now -- adding that the startup may announce a new fundraise in the next three weeks. Two persons in the know told Mint that Vedantu will get around $100 million in the fundraise at a valuation of $1 billion.
There are strong rumours about Vedantu being acquired by Byju’s. What do you have to say about this?
We haven’t been reached by Byju’s this year for an acquisition. We didn’t start Vedantu to get acquired or to chase high valuations.
There were several acquisition offers last year, which we haven’t considered seriously or even taken to Vedantu’s board. Rumours of our acquisition come as a complete surprise, as we haven’t even had one direct conversation with anyone this year.
We (Vedantu founders) have been in the education industry for 15 years. If exit outcomes were so important to us, we wouldn’t have built Vedantu or been in edtech.
At present, Vedantu is growing three times year-on-year and we have no reasons to get acquired. So talk of our acquisition is just a “figment of someone’s imagination”. We continue to build Vedantu.
When do you expect to close your new fundraise?
We are in the midst of a new fundraise at present. Since we still have to close it, we cannot disclose the quantum. However, we will announce it this month.
Are these rumours expected to impact your current fundraise? What are you hearing from investors?
All our investors have been in the business for long, and are used to these rumours. We are fortunate for their backing. Unfortunately, managing these rumours gets challenging, and we have received several calls from our vendors since morning.
Byju’s and Vedantu have common investors. How does that affect Vedantu?
The only common investor between us is Tiger Global, and so far we haven’t faced any challenges. Tiger has opted to not take a board seat in Vedantu, which as a practice they have followed for certain other investments as well. We value Tiger on our cap table, since they have backed several successful businesses in India.
With market dynamics choosing its leaders in edtech, has it been difficult to raise funds?
Agreed there is competition, but there is also a large market up for grabs. With consolidations at play, there will be two to three market leaders left. Vedantu is a challenger brand, growing at three to four times annually.
Hence, we attract investors which care about growing their investments also 3-4x. The return equations for most investors don’t make sense if they back startups with bloated valuations, and Vedantu is a lucrative option there. So for the above reasons, there isn’t a challenge in fundraising, as we continue to attract investors that expect much higher returns from us now.
With new funds coming in, what will Vedantu’s focus be? Will it enter newer markets of higher learning through acquisitions?
No, we will continue to focus on K-12 and deepen our offerings for the segment. We are always open to acquisitions but our investments will be on improving teaching experiences and our reach and delivery of our courses as we look to improve outcomes for our students.