A couple of days ago, on August 5, 2020, Indian EdTech major Byju’s bought the rising star WhiteHat Jr. for USD 300 million, all cash. This was a phenomenal deal for both parties
- Byju’s acquired a lot of paying customers in India and USA in the red-hot coding for kids market
- WhiteHat Jr. got a swift exit with amazing returns – USD 300 million at an investment of USD 11 million VC money and merely 18 months of incorporation.
Before we dive deep into the details of The Deal, here is what Byju’s and WhiteHat Jr. are in the EdTech space
- Byju’s is an EdTech firm founded by Byju Raveendran in 2011. It is currently the World’s most valued EdTech company at USD 10.5 Billion and provides an online learning platform for students from primary to higher secondary level education. Most of the revenue comes from premium subscriptions where small videos on most courses are available.
- WhiteHat Jr. is an EdTech startup by Karan Bajaj in 2018. It provides an online learning platform for programming for kids from 6 to 18. The format is a 1-1 live class and is also the primary source of revenue for the platform.
If we look at the revenue model, then Byju’s works on a subscription-based monthly pay model whereas WhiteHat Jr. works on a more interactive per course model. Byju’s benefits from reuse of courses where the same content can be consumed by multiple folks and increase profitability for the company. On the other hand, WhiteHat Jr. benefits from a common course model being taught by real people in a close interaction model. This could lead to higher repeat business for a successful course, a close-knit feedback mechanism between the tutor, and gradually access to a higher paying group.
Now, coming back to the deal, the investors at WhiteHat Jr. had a real party day – more than 10X in around 18 months, a dream for any VC. Byju’s also got its hands on the higher paying group and the highly sought-after segment of programming courses for kids.
However, if we calm down our emotions for a moment and think about it carefully – have the creators of WhiteHat Jr. cashed in too early. Was the lure too big to resist? WhiteHat Jr. was already on its way to a USD 150 million revenue in its second year. A little more push in more countries and it could have crossed USD 500 million, maybe more in the COVID and post-COVID world. A little more time and effort and the overall reach and profits from the company could have been huge – perhaps not 10X but way more in pure money terms. What transpired between the founders to close this deal so quickly is a boardroom secret but a little more time and resistance to quick exit might have lead to a lot of healthy competition and cheaper options for the students.
Still, Congratulations to the Byju’s team for cracking this deal and the investors in WhiteHat Jr. for having a gala time even in COVID times.
What do you think about the deal? If you have other interesting insights that you wish to share, please add them to the comments section or let us know at contact@booleanidea.com.
