Existing investors SoftBank Vision Fund 2, Leeds Illuminate, Accel, CPP Investments and the Chan Zuckerberg Initiative participated in the round.
TPG Rise has invested $100 million in Eruditus while SoftBank has put in another $20 million.
Eruditus has emerged as the largest Indian edtech firm by revenue with Rs 3,800 crore in FY24. It is on track to clock over Rs 5,000 crore in revenue this fiscal, its founder Ashwin Damera told ET.
He said the firm will now start the flipping process to move its domicile from Singapore to India.
ET first reported in January on Eruditus’ plans to shift domicile here, joining a league of Indian startups with holding companies in the US and Singapore.
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This was the longest amount of time the company took to close a funding round as global investors still have questions on the edtech sector in India amid Byju’s troubles, Damera said.“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.”
After PhysicsWallah raised $210 million last month, this is the second major deal in the education technology space even as Eruditus’ smaller rival Upgrad is closing a $50-60-million round from existing investors, as reported by ET on October 16.
Several edtech companies have shut shop and returned capital to investors while Byju’s continues to struggle.
“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.
Funding use, expansion
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 firm also plans to invest and scale businesses like study-abroad, introduce more courses, and widen the number of university partnerships. It has around 80 university partnerships and will take the same 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 may also use a part of the latest funding to service some of its debt though the payment cycles are through 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.
According to Damera, who was a nominee for the Comeback Kid category in ET Startup Awards this year, the core enterprise business is profitable and growing very fast.