upGrad forays into test prep market with Gate Academy buy

Mumbai-based higher education services provider upGrad Education on Tuesday announced its entry into the test preparation market with the acquisition of The Gate Academy (TGA).

Financial terms of the deal were not disclosed.

Post deal, TGA will operate as a subsidiary of upGrad and retain Ritesh Raushan as CEO, as per a statement. Additionally, upGrad will invest over Rs 100 crore in its new subsidiary and develop over 20,000 hours of content in multiple languages to provide access to at least 1 million test takers annually, the statement said.

Bengaluru-based TGA operates 57 coaching centres across India and has 76 million hours of videos that are consumed by about 2 lakh enrolled learners attempting entrance examinations, such as GATE, and applying for public sector jobs.

Just the government exam preparation market sees around 40 million applicants every year, who spend about Rs 10,000 each, opening up a new Rs 400 billion market for the company, the statement said, without disclosing the source of the data.

“The acquisition also sets in motion upGrad’s plans to build a comprehensive post K-12 ecosystem. Bringing in TGA opens up a much larger addressable market that acutely needs quality online training and counselling,” Gaurav Kumar, president of corporate development at upGrad, who spearheaded this acquisition, said.

TGA is the first in a series of acquisitions the Ronnie Screwvala-led firm has lined up for the next three months. In April, it had set aside $7 million to fund the acquisitions.

Founded in 2015, upGrad claims to have impacted about 1 million individuals globally. It provides online programmes in the areas of data science, technology, management and law to college students, working professionals and enterprises.

The programmes are designed and delivered in collaboration with universities such as IIT Madras, IIIT Bangalore, MICA, BIMTECH, NMIMS Global Access, Jindal Global Law School, Duke CE, Deakin University and Liverpool John Moores University.

In September, the company announced the appointment of its first international business CEO, Saranjit Sangar, to lead operations of its British, Europe and Middle Eastern businesses.

In its most recent fundraise, UpGrad raised $6.7 million in debt funding from IIFL Income Opportunities Fund Series II, in August. The debt round came a month after the company revoked employee salary cuts. In the same month, it also made four new appointments in senior leadership roles.

Earlier this year, it appointed Arjun Mohan, former chief business officer of edtech firm Byju’s, as the CEO of its India operations.

upGrad’s previous acquisitions include CohortPlus, Acadview and Pyoopil.

As the Covid-19 pandemic disrupted traditional in-person teaching, the edtech sector saw increased user acceptance, propelling several startups to increase their M&A activities in the period. 

Companies that were recently acquired by edtech firms include Klarity, Coursavy, LabInApp, WhiteHat Jr, Mastree, PrepLadder, Avagmah, CodeChef, IELTS Material, Kreatryx and Meritnation.