The Eruditus Group is acquiring Silicon Valley-based online education company iD Tech for $200 million, cofounder and chief executive Ashwin Damera told ET.
The acquisition will mark the Mumbai-based entity’s expansion beyond higher education into the K-12 STEM space, or school education in the science and mathematics stream.
iD Tech will continue to operate independently, maintaining its team of instructors and employees, even after the acquisition closes.
“The K-12 segment is not something that Eruditus has a footprint in. So, it makes sense for us to acquire and enter through a partnership like this, a strategic one,” Damera said.
Eruditus wants to make iD Tech’s courses accessible to consumers across Southeast Asia, Latin America and China.
“The time zones for conducting the courses can be changed to suit individual countries. Pricing can be more India friendly. We can get local instructors in some cases,” he said.
Nearly all of Eruditus’ courses are conducted in partnership with universities.
Earlier, iD Tech used to hold summer camps at more than 150 universities worldwide, but the company recently moved all its offerings online because of the Covid-19 pandemic.
“They have had partnerships with universities for in-person courses. Online partnerships are something that we will be helping them with,” Damera said.
This is Eruditus’ first acquisition since it was founded in 2010.
“We did look at WhiteHat Jr a year ago (eventually acquired by Byju’s). We looked at players in other markets. This seemed to be the best asset that fits us,” he said.
Eruditus expects to grow 2.5 times in the next 12 months, with consolidated revenue reaching $500 million in FY22.
The group closed FY21 with $185 million in revenue.
“We will go into a new funding round in a few months — partially to fund this acquisition but also to create a pool for organic as well as inorganic growth,” Damera said.
Sequoia Capital and Prosus Ventures are among Eruditus’ current investors.
It intends to raise $200-$250 million in its next funding round. It has raised $125 million in primary capital so far.
The United States is its biggest market, followed by India. Other key markets are Latin America and Europe.
The Indian ed-tech industry is expected to grow at 10x over the next five years to reach $5 billion by 2025, according to a recent report released by RedSeer Consulting, an internet focused consulting firm.
“In India, it is expected to grow from 90 million individuals in FY20 to 133 million individuals by FY25. Paid users are expected to increase from 1.2% to 8.1% by FY25,” it said.