BYJU's acquires another American startup, plans to spend $1 billion on US expansion
BYJU’s has acquired US-based digital reading platform Epic, which focuses on kids under the age of 12, for $500 million.
- The Indian edtech giant plans to invest about $1 billion in the US market to expand its presence globally.
- The company believes that the international market would make about a third of its revenue in the next three years.
BYJU’s has flagged off its American expansion plan with the acquisition of US-based digital reading platform Epic, which focuses on kids under the age of 12, for $500 million. Epic runs on a subscription model that gives classrooms and families unlimited access to thousands of books, videos and quizzes.
The seven-year-old American startup, founded by Suren Markosian and Kevin Donahue in 2013, has a user base of two million teachers and 50 million kids registered on the platform. The company claims to have doubled its user base from 20 million kids pre-COVID. Epic has raised about $50 million to date from institutional investors like Creative Artists Agency, Evolution Media and Reach Capital.
This acquisition of Epic is in line with the plan that BYJU’s founder and chief executive officer (CEO) Byju Raveendran described in an interview with Business Insider in November last year.
“It’s very different how kids learn at different level — at individual level, subject level, age level or grade level — so what we have done is that for a lot of these early-age group level we have used a lot of these movie-like or game-like interaction to make sure that they get interested in the subject. By bringing that interactive appeal, we have been able to engage, but at the end of the day we are an educational company and our core strength has been how do you simplify a concept, how do you help them visualise the context and how do you help them contextualise the concept.”
“And so we've built this platform where children can independently discover any book or any content they like to read. The platform makes it a lot of fun to read, and a lot of 100 discoveries, new books, or kids love using it,” Markosian said. Last year, around one billion books were read on Epic’s platform.
BYJU’s looks to go big in the US market
The Indian business will continue to make money from the recently-acquired Aakash, which has a network of 200 coaching institutes bought for $1 billion in April 2021.
Anita Kishore, head of strategy at BYJU's told Business Insider that India will continue to be BYJU’s biggest market in terms of revenue due to the presence of BYJU’s core product offering in the country as well as because of the Akash acquisition.
Three to four years out, we would see about a third of the revenue coming from international markets,
Kishore explained that BYJU’s is planning to focus now on the American market, as the USA is its biggest market outside of India.
“The other advantage that US marketing gives us is the fact that it is English speaking, right? A lot of our products, while you know, they need to be customised, and so on. Given the language is English, we are able to actually scale those products well, with teams in India. Hence, the US has been a key market for us,” she added.
WhiteHat Jr, BYJU’s other portfolio company that was acquired for $350 million in August 2020, has been folded by BYJU’ into the BYJU’s Future School brand that will focus on international markets like the US, Canada, Australia, New Zealand, and other English speaking markets. The offering was launched last month, with 11,000 female teachers.
For this venture, WhiteHat Jr has also stepped foot outside of its traditional coding for kids offering to introduce Maths. WhiteHat Jr’s CEO and founder Karan Bajaj has been heading this vertical and will introduce other offerings Science, English, fine arts and music classes soon.
Kishore further added that BYJU’s will be clocking in more than $300 million in revenue from the US market alone in the financial year 2022. Of this, BYJU’s Future School will be clocking in about $100 million+ in revenue, Epic would add another $100 million+ to it and Osmo doing another $100 million+.
Notably, BYJU’s is currently the most valued edtech startup in the world and the highest valued Indian startup. The company has garnered the interest from marquee investors like Chan-Zuckerberg Initiative, Sequoia Capital India, Silver Lake, Tencent, Canada Pension Plan Investment Board (CPPIB), General Atlantic, Tiger Global, Qatar Investment Authority and many more.
The company had reported a revenue of ₹2,800 crore in the financial year ending March 2020, as its user base crossed 50 million. It has doubled its user base twice since then due to the tailwind from remote learning.
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