The markdown has translated to a valuation of about $2.9 billion as of March 31, 2023, a drop from $3.2 billion in August 2021, a price at which the Mumbai-based startup had last raised equity-based capital from investors.
The Private Shares Fund, also an investor in Udemy, plant-based meat developer Impossible Foods, video games developer Epic Games and enterprise software company Automation Anywhere, had pegged the fair value of its 36,264 shares in Eruditus at about $4.66 million in the quarter ended March 2023 in a financial update to the US Securities and Exchange Commission (SEC).
The fund’s other investments in edtech include Learneo, Masterclass and Udacity. The SEC disclosure added that the fund’s investment in Eruditus has been made via a special purpose vehicle in which the fund has a direct investment.
ETtechIn August 2021, Eruditus had raised $650 million in a round led by SoftBank and Accel. It was Accel’s largest investment in edtech at the time. The equity fundraise, which also included a secondary component, valued the company at $3.2 billion, marking its entry into the unicorn club—startups having a valuation of at least a billion dollars.
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The Private Shares Fund’s mark down of Eruditus’ valuation was first reported by financial portal Moneycontrol.
The executive education-focussed startup then went on to close a $350 million debt financing from Canada Pension Plan Investment Board (CPPIB) to largely fund erstwhile aggressive acquisition plans in its overseas markets.
GSV Ventures, The Chan Zuckerberg Initiative, Leeds Illuminate, Prosus, Sequoia Capital India, Bertelsmann and Chimera are among Eruditus’ other existing investors.
Earlier this year, founder and CEO Ashwin Damera told ET that the company was aiming to grow its revenue by 40% in FY23. On a bookings basis, Eruditus will close at $420-$430 million from $321 million in FY22, Damera said, adding that the company aims to become profitable by the quarter ended June 30.
In the 12 months to June 2022, Eruditus saw its consolidated revenue surge 87% year-on-year to $245.26 million, even as its net loss adjusted for exceptional items such as employee stock options, goodwill impairment and unrecognised revenue expanded to around $66 million.
The edtech’s total loss swelled 46% to $386.82 million, including exceptional items. Of the total revenues during FY22, Eruditus’ operations in the US accounted for $119.61 million—almost half of the total amount—followed by Asia and the Asia Pacific region with $54.18 million.
Founded in 2010 by Damera and Chaitanya Kalipatnapu, Eruditus provides executive-level programmes for working professionals. Eruditus is the second unicorn in the upskilling and professional courses space, the first being upGrad.
Valuations are substantially down in the secondary market deals of edtech firms with some exceptions, Deborah Quazzo, managing partner at US-based GSV Ventures, which has backed edtech unicorns including Eruditus, PhysicsWallah and Lead, had told ET in an interview in February 2023.
“If their (edtech firms) last valuation is sitting above what a fundamental value would be today, many of them would be in a position to actually grow and manage the company through to the valuation,” Quazzo had said on valuation corrections and outlook for companies in the space.
ETtechThe latest development follows suit of other valuation markdowns that multiple unicorns in India are facing, as inflationary pressures in the market affect shares of public and private technology companies globally.
Other late-stage startups that have had their valuations revised by US institutional investors in recent months include edtech platform Byju’s, fintech company Pine Labs, online pharmacy PharmEasy, mobility company Ola and food delivery company Swiggy. These companies saw their valuations being marked down by asset managers and investors such as BlackRock, Vanguard, Invesco, Baron Capital Group, Neuberger Berman and Janus Henderson.