A WhatsApp message, six weeks of talks and a $300 million deal – how Karan Bajaj sold his less than 18-month old startup White Hat Jr to Byju’s

Karan Bajaj, Founder and CEO, White Hat JrBI India
  • Byju’s acquired White Hat Jr for an all-cash deal of $300 million.
  • The acquisition of White Hat Jr has got everyone talking for its multiple facets – an 18-month old startup made one of India’s largest and fastest venture exits.
  • In an interview with Business Insider, Karan Bajaj, founder of White Hat Jr, gives us a lowdown of how the deal happened and answers the question – did he sell too soon?
  • With the deal, Byju’s and White Hat Jr are gearing up for launch in six new countries– UK, Australia, New Zealand, Singapore, and Germany this month.
Six weeks ago, Karan Bajaj, founder of coding edutech startup White Hat Jr, got a WhatsApp message from Byju Raveendran, co-founder of edutech unicorn Byju’s, saying that he really admires how Bajaj has built the company. The duo chatted and over the next day, a $300 million deal was chalked out – Byju’s was going to acquire White Hat Jr.

The acquisition of White Hat Jr has got everyone talking for its multiple facets – an 18-month old startup made one of India’s largest and fastest venture exits with an all cash deal of $300 million, and Bajaj being one of the major shareholders of the company made a sweet fortune.

StockholderStake held in White Hat Jr
Karan Bajaj40-50%
Employees10-15%
Investors 45-50%

And this meant, the investors also got a great exit.
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InvestorInvestmentExit value
Nexus$5 million$66 million
Omidyar$3 million$45 million
Owl Ventures$3 million$30 million
Source: ET

Arriving at the $300 million number

The entire deal was done in six weeks and was signed virtually. After Byju WhatsApped Bajaj, they set up a zoom call and aligned the contours of the deal within a day.
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The first week was about aligning the deal and the term, the second week was aligning with investors and the next four weeks were about the deal closure.

And while Bajaj said there was no science behind the $300 million number, he thought it was a great deal, even when the company was growing at a fast rate and closed July with a revenue of $150 million.

“We were doing very well revenue wise and with that you would ask for a high value but that was also offset by the fact that the company is very young – it hasn’t lived through many cycles of ups and downs. Neutralising all of that I thought it was a very attractive deal for all of us – Byju’s got the company at a lower multiple than what a company with this revenue would make. Investors made an excellent return on investment and employees who held stocks too got a good deal,” said Bajaj.
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Did you sell too soon?

For Bajaj, the yogi-turned entrepreneur, who also once led Discovery India and lived in an ashram for a year, money was never an issue. He doesn’t think that he could have held on to the company for longer or gotten a better price, as he has always been more of an “impact” guy.

“I realised that I have figured out a product which seems to work really well in India and the US. The next thought was how do I expand very aggressively globally and create teaching jobs. I figured out there's nothing I will be able to do faster and better than I could do with Byju’s,” said Bajaj.

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The startup was doubling its India and US business month-on-month. In fact, before lockdown the revenue of the company was at $25 million a month and today that has shot up to $150 million, according to data shared by Bajaj. Since its launch in the US in February, they have seen a 150% month-on-month growth and 55% of their revenue comes from the US.

Byju’s and White Hat Jr to launch in 5 new countries

There were multiple reports about White Hat Jr having been approached by many other players as well. Bajaj acknowledges that there were a lot of inbound offers for investments, acquisitions, but they didn’t play one against the other. “The moment I spoke to Byju, I found a vision fit and we didn’t negotiate or try to get a better deal,” he said.

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For Bajaj, the common thread with Byju was a boundaryless view of the world and that also means that they are now set to launch in more countries. Byju’s and White Hat Jr are gearing up for launch in six new countries– UK, Australia, New Zealand, Singapore, and Germany this month.

With the National Education Policy making coding a mandatory subject in school, there’s a vast opportunity in India as well. Both Byju’s and White Hat Jr see over 65% of their users coming in from beyond the top 15 cities, and their aim together is to go deeper into India.

For White Hat Jr, which has been cashflow positive since January, while there has been a Business to Consumer revenue from their coding lessons, the NEP also opens up a Business to Business revenue model, where they can help schools teach coding. “It’s a tough subject to create and deliver, and we already have the content available,” said Bajaj.

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White Hat Jr continues to hire aggressively to fit into their growth strategy.

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