Unacademy and BharatPe

Jan 4

Good Morning! It's Tuesday and welcome to the year's first real newsletter update. We have a bunch of new subscribers so welcome to all of you and glad to have everyone here. There has certainly been a flurry of news in the first few days of 2021 with TechCrunch confirming CRED's Series C round as well as Google & Snapchat's intentions to invest in ShareChat. But in today's update, we will be covering what potentially might be India's next unicorn and Unacademy's latest acquisition.

  1. http://bit.ly/2XdPR6O: Unacademy makes its fifth acquisition of 2020

➡️ I don't think there's too many startups in India that have had the kind of year Unacademy did in 2020 and the company came very close to being my pick for the Breakout of the year (along PagarBook and WhiteHat). And just before 2020 came to an end, the company acquired NeoStencil- a test prep platform for government entrance exams.

➡️ But first to recap the year Unacademy has had, the company went from <80k active subscribers at start of 2020 to 440k active subscribers by the end of the year and along the way raised 3 rounds of capital from the likes of Facebook, General Atlantic, Softbank, Tiger Global and Dragoneer Investment Group which values the EdTech behemoth at over $2B now.

➡️ Over the last year, Unacademy has also made several acquisition as the company has been flushed with capital- Kreatyx, CodeChef, PrepLadder, Mastree, Coursavy and now NeoStencil. The company has also spun out a product internally this year called Graphy- which is a subscription product to watch and consume interactive content (think Quibi but content that combines learning with entertainment).

➡️ While some of these products fit directly into Unacademy's core product around test prep for various entrance exams across the country (Kreatyx, PrepLadder, Coursavy and NeoStencil), the others let Unacademy expand their product line into new segments attracting a whole new consumer base. For example: Mastree is targeted towards K-8, which Unacademy has historically not tackled.

➡️ The company's two-pronged strategy for acquisitions is certainly interesting- while they can focus on maintaining their dominance in the test-prep category through the first type of acquisitions, they can now also expand the breadth of students they target for all their products. If someone uses Mastree and has a great experience with it, I would assume they are more likely to use Unacademy when they start thinking about their college entrance exam preparations.

➡️ No Indian EdTech company has really captured the entire lifecycle of the Indian student and this is where Unacademy could really thrive with Mastree (K-8), Unacademy + Other Test Prep acquisitions & spin-offs (9-12) and with their acquisition of CodeChef they could also get into post-college upskilling side of things- helping engineers get jobs through CodeChef's platform and future content around it.

  1. http://bit.ly/3olHKBm: BharatPe to raise up to $200M

➡️ The payments & lending company BharatPe plans to raise up $150-$200M in a new round of funding along with $500M in debt financing. The company plans to close the first tranche of ~$100M by March and the debt over 2 years. The company last raised $75M from Coatue Management & Ribbit Capital last February, which valued them at $400M.

➡️ The new round could value the company, upwards of $1B- which could make it the country's next unicorn and would be a step up from their last round. BharatPe also currently has a pretty low burn ($3M/mon) for how much it's raised and hasn't utilized the capital from its previous round yet.

➡️ A majority of the company's business resolves around lending- and it currently disburses ₹100 Cr (~$13.7M) worth of loans every month. BharatPe also applied to be an Non Banking Financial Companies with the Reserve Bank of India, but it's application was rejected- so it continues to partner with several other NBFCs to deploy capital to the merchants on its platform.

➡️ On a completely separate tangent, BharatPe is also teaming up with Centrum Group to acquire the distressed Punjab and Maharashtra Cooperative (PMC) Bank- which could catapult BharatPe from just a lending & payments company to becoming a bank.

➡️ All in all, this is an exciting for fintech in India and for BharatPe in particular. The company seems to be on its way to be more integral for small merchants all over the country, and if they can pull of the PMC takeover it could also result in them building and launching a digital-first bank for merchants with a lot more financial services to offer.

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