Many learners in the country aim to crack government jobs after completing their degree education.
Edtech start-up upGrad recently bagged its first external funding, a significant $120 million from Temasek. Co-founder and managing director Mayank Kumar tells Asmita Dey that the company is looking at active M&A opportunities, and M&A is going to be a part of how it will seek growth in this ecosystem. Edited excerpts:
upGrad started operations in 2015, but raised external funding only recently. What prompted you to look for investors now?
When we started off, we wanted to build the business to a certain level, to a certain scale. We could have gone out and raised money a year earlier or two to three years ago, but we did not feel we were fully there yet to take accountability of bringing in an investor and working with them. Once you have an investor, a lot of things change. There are certain ways in which you need to evolve your operations, your decision making. We wanted to bring in a partner once we had a good product market fit. We have now managed to scale up in India, establish few M&As (mergers and acquisitions), while opening up new fronts for international markets. From here on, we are looking forward to building this ecosystem out and scaling this up.
You have mentioned that a big chunk of the capital will be used to fund global expansion. What will be the approach? Will you look at acquisitions or focus on broadening your portfolio of offerings?
Our approach is going to be creating local programmes for local markets and thus being able to establish a stronger presence. In learning, things have to be customised and contextualised for the local environment. We would like to focus on creating larger acceptability of upGrad as a brand in these local markets. In the process, if a great partnership or collaboration opportunity comes up, we will be open to those options as well.
You are in the early days of your foray into the test-prep market in India — an area where some of your competitors already have established businesses. What was the reasoning?
Many learners in the country aim to crack government jobs after completing their degree education. Entrance tests are often a prerequisite for several segments of government and public sector jobs. We wanted to tap into this segment and our acquisition of The Gate Academy (upGrad Jeet) was towards this end. While we already have a strong presence in the higher education sector and courses for working professionals, adding the test prep segment in our slate is key to our ambition of servicing all learners within the 18-45 year age bracket.
Are more acquisitions in the pipeline?
You will hear about more M&A plays coming from our side because there are a few active conversations going on. M&A is going to be a part of how we will be seeking growth in this ecosystem.
You have crossed the million-user mark. How much of this growth happened during the pandemic? Which courses are witnessing more demand?
In March 2020, we were at about half a million registered users. By early January is where we touched the million mark. So, a large portion of the million did come up in the course of the pandemic. Learners are typically looking for multiple high quality programmes. While hard skill programmes like python, excel are in demand, we are seeing a very significant enrolment for courses related to career improvement. In the January-March quarter, our learners saw an average hike of close to 50%. Overall, the highest annual package that someone has got via upGrad support is Rs 73 lakh.
How has FY21 been in terms of revenue? Will you consider tapping into the K-12 segment in the future?
I don’t have the exact figures, but I can say that we have grown more than 100% in FY21. We are happy catering to our current set of users for now.