Upgrad: Upgrad secures $60 million from Temasek at a fixed valuation of $2.25 billion

Singapore sovereign wealth fund Temasek has invested an additional $60 million in higher education and upskilling Improvement with a fixed valuation of $2.25 billion, said people directly briefed on the matter.

Separately, founder and president of Upgrad Ronnie Screwvala has bought Bharti Enterprises‘ stake in the company for 20 million dollars, they added.

Bharti Enterprises had a 1% stake in Upgrad after the latter’s share swap acquisition of the training and coaching solutions company. Centum Learning in 2022.

Screwvala, a serial entrepreneur who earlier started UTV, now owns a 45% stake in Upgrad. It is playing a larger role in the educational technology signs after the departure of co-founder Mayank Kumar as reported by ET on October 16which also mentioned about the impending funds round.

Screwvala plans to take Upgrad public over the next 7-8 quarters.

“The financing has already been closed. “Ronnie also stepping up his involvement further shows commitment to the recent changes and the more hands-on role he will play in the future,” said a person briefed on the development.

This also makes Screwvala one of the few entrepreneurs with the largest stake in a venture capital-backed startup. Temasek and IFC are among the company’s main investors.Read also | Investors’ exit from board was biggest setback, Byju’s now worth zero: founder Raveendran

Screwvala declined to comment on ET’s query.

“Currently, they (Upgrad) are making a quarterly revenue of around Rs 600 crore, which translates to around Rs 2,400 crore for the current financial year,” said one of the people cited above.

ET’s report last week said that Screwvala’s return is in sync with Upgrad’s plans for a IPO in India and that the serial entrepreneur’s deeper commitment to the company may bode well for public market investors.

Upgrad’s total funding round of $80 million, including the secondary transaction between Bharti Enterprise and Screwvala, is the third-largest funding in the edtech sector, even as broader tension in the sector continues.

PhysicsWallah recently closed a $210 million financing in September, while executive education company Eruditus closed a $150 million financing at a fixed valuation of $3.2 billion.

Prior to the equity financing, Upgrad also closed a $35 million debt financing from Evolution X, a joint venture between DBS and Temasek.

Edtech startups have received around $650 million in funding so far this year, compared to $4.1 billion in 2021, the peak for the sector helped by Covid-19 tailwinds, as shown by Tracxn data and ET calculations.

Read also | Eruditus raises $150 million led by TPG Rise, a company that will relocate to India from Singapore

However, this is still up from just $315 million allocated to edtech for all of 2023, which was an 87% decrease from the $2.4 billion raised in 2022, reflecting the continued decline in sector in fundraising markets.

“Centum Learning is now part of Upgrad Enterprise and that is the fastest growing vertical in Upgrad,” said another person familiar with the matter.

A report by Upgrad investor 360 One said, “Enterprise revenue growth is strong and order book stood at Rs 104 crore in Q4FY24. Upgrad turned profitable in training and reskilling business and placement services in Q4… Consumer segment customer acquisition cost improved from ~30% in FY23 to ~22% in FY24. Non-university program revenue in Q4 of FY24 increased ~22% QoQ and ~81% YoY.”

Upgrad has agreements with more than 20 Tier I and II universities, offering more than 70 courses in the fields of data science, management, digital transformation, technology and law.