The well-known Allen Career Institute, famous for coaching success in Kota, is making its first move into online education by acquiring DoubtNut, a popular doubt-clearing edtech company. This acquisition is seen as a significant step for Allen, showing its interest in expanding into the world of digital education.
Sources say that DoubtNut is selling because it faced challenges in getting more funding after its Series B round. The deal will mostly involve stocks, with a bit of cash. This shows that DoubtNut has financial issues, and it’s a complicated situation for the acquisition.
Allen’s decision to buy DoubtNut comes after it got $600 million in funding in May 2022 from Bodhi Tree Systems, a partnership between James Murdoch’s Lupa Systems and Uday Shankar. Lupa Systems has invested in other Indian edtech companies, including Doubtnut and Harappa Education, showing they see potential in the Indian online education market.
DoubtNut had previously talked with Byju’s, a big edtech company, about being bought, but they couldn’t agree on the value of the deal. DoubtNut has faced challenges in making money and has been looking to join forces with another company for a while.
This acquisition will help Allen get into online education and grow its influence in this area. Allen has been working on its online platform, ALLEN Digital, by making new websites and apps for different courses. Hiring Abha Maheshwari, who used to work at Meta, as the CEO of Allen Digital shows how serious Allen is about using online platforms for education.
For DoubtNut, this acquisition is a way to deal with their financial and operational challenges. They spent Rs 194 crore in one year to make Rs 10 crore. Internal documents show that DoubtNut made Rs 26.6 crore in the last year, trying to find a way to survive in a very competitive online education market.
Co-founder Tanushree Nagori said in April that DoubtNut was not talking to other companies about being bought. However, sources say that DoubtNut was talking to a few other companies about being bought, and the Allen deal is what happened.
The Allen and DoubtNut deal will help Allen grow more online and make more money. Allen, started by Rajesh Maheshwari in 1988, is a top choice for students preparing for competitive exams. In the last financial year, Allen made Rs 2,277 crore from its courses and had a profit of Rs 429 crore.
This move by Allen is a big step in bringing together traditional coaching and modern online education. The success of this deal will shape how both Allen and DoubtNut do in the changing world of online learning.