Eruditus, a leading global edtech platform offering executive-level programs for working professionals, is on the cusp of securing a $150 million funding round led by TPG. This latest investment, which is expected to maintain the company’s valuation at approximately $3 billion, signifies sustained investor confidence in the higher education segment of the edtech sector. This comes at a time when other segments within the Indian edtech industry are grappling with challenges, making Eruditus’ achievement all the more remarkable.
A Strategic Shift: From Modest Secondary Funding to a Major Capital Raise
The discussions for this funding round began in 2023, with an initial focus on a more modest $50 million secondary round. The primary purpose of this smaller round was to facilitate exits for early investors. However, after achieving a full year of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) profitability, Eruditus saw an opportunity to expand the scope of the round significantly.
“The discussions to raise money started sometime last year, and the initial plan was just to do a small $50 million secondaries round where some early investors would take an exit. However, after achieving a full year of EBITDA profitability, Eruditus decided to kick off a larger round and close it before flipping its base back from Singapore to India,” a source familiar with the matter told Moneycontrol.
This strategic pivot reflects Eruditus’ growing confidence in its financial performance and market positioning. The decision to expand the funding round also aligns with the company’s broader ambitions, including a significant geographic shift in its operations.
Relocating the Base: The Impending Move from Singapore to India
One of the key aspects of Eruditus’ current strategy is its plan to shift its domicile from Singapore to India within the next 12-18 months. This move is expected to align the company more closely with its core markets and operational focus. “The idea is to close the TPG round before the process to flip back begins,” the source added. This relocation is seen as a strategic move that will better position Eruditus to capitalize on the growing demand for executive education in India and other emerging markets.
Both TPG and Eruditus have declined to comment on the ongoing discussions, but the implications of this move are clear. By relocating its base to India, Eruditus is signaling its intent to deepen its engagement with the Indian market, which continues to present substantial growth opportunities in the edtech space.
Eruditus’ Funding Journey: From Equity to Debt and Back
This $150 million equity round marks Eruditus’ first major fundraising effort since August 2021, when the company raised $650 million at a valuation exceeding $3.2 billion. Since that time, Eruditus has primarily relied on debt funding to fuel its expansion and operational needs. Notably, in 2022, the company secured $350 million in debt funding from the Canada Pension Plan Investment Board (CPPIB), which was largely used to support mergers and acquisitions.
The shift from equity to debt financing over the past few years highlights Eruditus’ strategic approach to capital management. By leveraging debt, the company has been able to maintain its equity structure while still accessing the necessary capital to pursue growth initiatives. The current $150 million equity round, therefore, represents a return to a more traditional form of fundraising, one that signals both confidence in the company’s valuation and a desire to attract new investors who can support its next phase of growth.
The Broader Impact on India’s Startup Ecosystem
The successful completion of this funding round will mark the return of significant capital inflows into the Indian startup ecosystem, following recent large-ticket raises by companies like Zepto and Meesho. These developments indicate that while investors remain selective, they continue to back companies with strong growth potential and a clear path to profitability.
Eruditus’ ability to attract significant investment in a challenging market environment underscores the company’s strong fundamentals and the attractiveness of the higher education segment within the broader edtech industry. Unlike K-12 and test preparation, which have faced considerable disruption and declining valuations, higher education platforms like Eruditus continue to thrive, driven by the increasing demand for upskilling and executive education among professionals worldwide.
Financial Performance: A Testament to Strategic Growth
In recent years, Eruditus has demonstrated significant growth and improved its financial position. The company’s operating revenue surged by 70% to ₹3,343 crore in FY23, compared to ₹1,962 crore in FY22. This impressive revenue growth is a testament to the strong demand for executive education programs, which have become increasingly important as professionals seek to enhance their skills in a rapidly changing job market.
Simultaneously, Eruditus managed to reduce its losses by 66%, from ₹3,094 crore in FY22 to ₹1,049 crore in FY23. This dramatic reduction in losses is largely attributable to the company’s focus on operational efficiency and its strategic investments in technology and content development. By streamlining its operations and leveraging data-driven insights to optimize its offerings, Eruditus has been able to achieve profitability while continuing to scale its business.
“FY24 is likely to be the first full year of EBITDA profitability for Eruditus,” said another source familiar with the company’s financials. This milestone is particularly significant in the edtech space, where many companies have struggled to achieve profitability despite rapid growth. Eruditus’ ability to generate positive EBITDA underscores the strength of its business model and its potential for sustained long-term growth.
Eruditus’ Founding and Growth Story: From Vision to Global Leadership
Founded in 2010 by Ashwin Damera and Chaitanya Kalipatnapu, Eruditus has grown from a small startup into a global leader in executive education. The company’s mission has always been to make high-quality education accessible to professionals around the world, and it has done so by partnering with some of the world’s leading universities and business schools.
Over the years, Eruditus has raised over $814 million in equity funding to date, excluding the current $150 million round. Its backers include prominent investors such as SoftBank, Prosus, Peak XV Partners (formerly Sequoia Capital India), the Chan Zuckerberg Initiative, and GSV Ventures. These investors have supported Eruditus’ vision of transforming executive education through technology and innovation.
One of the key factors behind Eruditus’ success has been its ability to adapt to changing market dynamics. The company has continually evolved its offerings to meet the needs of working professionals, providing them with flexible, online programs that are both accessible and relevant to their careers. This focus on innovation has allowed Eruditus to build a diverse portfolio of programs that cater to a wide range of industries and professional roles.
The Future of Executive Education: Eruditus at the Forefront
As the demand for executive education continues to grow, Eruditus is well-positioned to lead the industry into the future. The company’s focus on providing high-quality, accessible education to professionals around the world aligns with broader trends in the global job market, where continuous learning and upskilling have become essential for career advancement.
The COVID-19 pandemic accelerated the shift towards online learning, and while many sectors of the edtech industry have faced challenges as the world returns to normalcy, executive education has remained resilient. This resilience is due in part to the increasing recognition of the importance of lifelong learning, particularly in a world where technological advancements are rapidly changing the nature of work.
Eruditus’ ability to attract significant investment, achieve profitability, and expand its global footprint demonstrates the company’s strong position in this evolving landscape. As more professionals seek to enhance their skills and advance their careers, Eruditus is poised to continue its growth trajectory and solidify its position as a leader in the global edtech space.
Strategic Partnerships and Global Reach
Eruditus’ success can also be attributed to its strategic partnerships with top-tier universities and business schools around the world. These partnerships have allowed the company to offer a wide range of programs that are both academically rigorous and highly relevant to the needs of today’s professionals.
By working closely with institutions such as Harvard Business School, MIT, Columbia Business School, and INSEAD, Eruditus has been able to provide its students with access to world-class faculty and cutting-edge research. This has helped to differentiate the company’s offerings in a crowded market and attract a global audience of learners.
In addition to its partnerships with universities, Eruditus has also expanded its reach through strategic acquisitions. The company’s acquisition of iD Tech in 2021, a leading provider of STEM education for children and teens, marked its entry into the K-12 segment. While this segment has faced challenges in recent years, Eruditus’ focus on executive education has allowed it to weather the storm and continue growing.
The Path Ahead: Navigating Challenges and Seizing Opportunities
While Eruditus is well-positioned for continued success, the company will need to navigate several challenges in the years ahead. The global edtech market is becoming increasingly competitive, with new players entering the space and established companies expanding their offerings. To maintain its leadership position, Eruditus will need to continue innovating and adapting to changing market conditions.
One of the key challenges facing the company is the need to balance growth with profitability. While Eruditus has achieved EBITDA profitability, it will need to carefully manage its costs and investments to ensure that it can sustain this profitability as it continues to scale. This will require a focus on operational efficiency, as well as strategic investments in technology and content development.
Another challenge is the ongoing shift towards online learning. While this shift presents significant opportunities for Eruditus, it also requires the company to continuously improve its digital offerings and ensure that they meet the needs of a diverse global audience. This will require ongoing investment in technology, as well as a focus on providing a seamless and engaging learning experience for students.
Despite these challenges, the future looks bright for Eruditus. The company’s strong financial position, coupled with its global reach and strategic partnerships, gives it a solid foundation on which to build. As the demand for executive education continues to grow, Eruditus is well-positioned to lead the industry and continue making a positive impact on the lives of professionals around the world.
Conclusion
Eruditus’ $150 million funding round led by TPG marks a significant milestone in the company’s journey from a startup to a global leader in executive education. This investment reflects the continued confidence of investors in the company’s ability to deliver high-quality education to professionals around the world, even as other segments of the edtech industry face challenges.
With its strong financial performance, strategic partnerships, and focus on innovation, Eruditus is well-positioned for continued growth. As the company prepares to relocate its base from Singapore to India and expand its offerings, it is poised to lead the global edtech industry into the future.
In a world where continuous learning and upskilling have become essential for career advancement, Eruditus’ mission of making high-quality education accessible to professionals around the world has never been more relevant. With the support of its investors and partners, Eruditus is set to continue making a positive impact on the lives of learners around the globe, helping them to achieve their career goals and thrive in a rapidly changing world.