Bangalore-based Cue Learn Pvt. Ltd, which runs after-school math-learning startup Cuemath, was in the news earlier this year after it raised $15 million from names like CapitalG and existing investor Sequoia India. The firm, known for its stringent teacher selection criteria and low student ratio, claims to have enough funds for 12-18 months, during which period it will start expanding to Tier II cities and firm up its overseas plans. Founder and CEO Manan Khurma spoke about all this, and more, in an interview with VCCircle. Excerpts:
What is Cuemath's road map for this calendar year and next?
This year, we are focusing on expanding our teacher network in Tier I centres, where we are currently present. By the end of this year and early next year, we will start expanding to Tier II cities.
Considering your low selection rate for teachers, won't it be tough to find the right quality of resources in Tier II centres?
That has not been the case. We have already started work on that front, and have found that there is no dearth of incoming applicants. In that sense, these towns are no different from Tier I centres. The more important thing is to select the right candidate who will clear our stringent selection procedure. (Cuemath claims it selects one out of 450-plus applicants on an average).
While the method of acquiring teachers might have to evolve, the availability of talent pool is not a problem.
How much of your tutor network is accounted for by male teachers, considering you mainly target well-educated women with time to spare?
While we have no restrictions on that front, the design of our business model suits non-working educated women. We do have male teachers, but they account for less than 1% of our overall network.
You have talked about overseas expansion in the past. How does Cuemath plan to disrupt markets where math education is already being imparted in a similar way?
That's the case with only a few international markets, such as South Korea, Finland and Singapore. The rest of the world faces pretty much the same problems as India.
The beauty of the K8 (UKG to eighth standard) curriculum is that it is pretty standard across the globe. We have done some preliminary research and identified potential markets. Singapore, despite its excellent math pedagogy, is a large market while other Southeast Asian countries, like Thailand and Indonesia, have huge potential. The Middle East has a large Indian diaspora and strong demand for quality education.
That said, our overseas expansion plans will take a more concrete form next year.
Do you think you might have to revisit your pedagogy strategy, such as in-person element and low student ratio, as you expand?
The in-person element, which is our differentiator, will remain core to our teaching model. However, there will be peripherals centred around this focus.
Do you have any plans to cater to students beyond K8? Or to go beyond mathematics?
Our target focus is education during the formative years. The market is very deep in this segment. Though we would want to look at products for senior-grade students as well, we don't have any plans as of now.
As for venturing beyond math, we will continue to stick to our core strength, i.e., imparting math learning. We want to be the best in the segment.
You have raised about $20 million so far. How have you spent it?
A significant portion has gone towards building a strong team and product, the two key components of our business. A good chunk has also gone towards operational expenses and marketing activities.
Are you looking to raise funds?
Not at this point. We have raised significant capital in our last round and are growing fast. This combo give us a long runway. We will not need funds for the next 12-18 months.
When do you hope to break even?
I cannot give an exact timeline. But we are still 2-3 years away from reaching that point.
Have you planned any alternative revenue streams?
The teacher-business revenue-share will continue to be our main income stream for the foreseeable future. We believe there is immense depth in this channel. Growth here depends on two axes—our existing teacher base ramping up capacity utilisation, and acquiring more teachers. We have the whole of India to expand into.
Will you also look at acquisitions to step up growth?
The key question for us at this point is sustainable growth. There are a few objectives we want to achieve, without compromising on quality. However, at some point, when we look to build a bigger consumer-facing brand, we will consider acquiring companies that fit our objectives.
At this point, there are no such plans.
How crucial is tech to your overall business?
Though the final delivery of our product is offline, it’s enabled through integration of technology into every aspect of the platform, whether it's how the teachers run the centres, the way students interact with the system or how parents monitor their kids' progress on the app.
Let's say the method of imparting math education changes drastically in 10-15 years. Will businesses like yours be rendered irrelevant?
I don’t see that happening. Schools, by design, are set up with a very different set of objectives. Also, in a bigger set-up, it is difficult to inculcate informal learning and in-person elements. Reducing student ratio is also a very important factor. But these are big ‘ifs’ for schools.
What is your burn rate? Can you share some growth numbers?
I cannot comment on growth numbers. Our current focus is on laying a strong foundation and sustainable growth, and we have not gone all out on marketing and advertising so far. In that sense, we are comfortable as far as our burn rate goes.
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