International growth is a critical part of our $2 bn revenue goal: Ronnie Screwvala, upGrad

Mumbai based upGrad Education, which runs an eponymous edtech platform, raised $120 million on Monday in its first external funding round. The investment from Singapore state owned Temasek Holdings is expected to accelerate the six-year-old edtech’s bid to achieve $2 billion revenues by 2026, upGrad co-founder and chairman Ronnie Screwvala told TechCircle. 

UpGrad reported an annual revenue run rate (ARR) of Rs 1,200 crore ($165 million at the time) for the financial year 2020-21 (FY21), with an average revenue per user (ARPU) of Rs 2.5 lakh.  

Edited excerpts: 

How will upGrad use the capital it has just raised?   

We plan to use the fresh capital to further strengthen our team, scale our global market operations, bolster the technology and product capabilities, pursue M&A opportunities, expand graduate and post-graduate degree portfolio in India, and scale up operations to achieve our $2 billion revenue goal by 2026, thereby reinforcing our position as a global higher edtech leader emerging from India. 

How much capital did the company raise internally prior to this round? 

Prior to this round, the total funding was close to $25 million.  
 
How did the company perform during the pandemic last year? 

upGrad's performance in 2020 has been excellent in terms of financial gains as we grew by 100% in revenues, delivered 10 million hours of learning experiences and crossed 1 million registered learners across more than 50 countries.  

We had a strong March ‘21 and so our annual revenue run rate (ARR) stands at $165 million which translates to Rs 1,200 crore.  

It’s raining unicorn valuations in India. Where does upGrad’s valuation stand after this round? 

We don’t comment on valuations.  

All businesses need to be built to withstand every season and plan for the long term. We do not co-relate our plans to funding. The only brand we want to build is upGrad as a global edtech company that disrupts, impacts careers and the lives of many and sets new benchmarks on lifelong learning in the 21st century. 

The pursuit of a mythical brand attachment of ‘unicorn’ will distract this pursuit. Strong investors and partners will always follow long term business. 

How do you view the competitive arena, specifically players such as Byju’s and Unacademy, which have also been raising large funding rounds? 

First, we are not in the K-12 space where Byju’s and Unacademy operate.  

Second, we see that segment (K12) having hugely benefited from the pandemic and guilty parents, plus FOMO of kids at home. The true test of this segment will be when things normalize, as they will in early 2022.  

Third, we are clear that the higher education sector is and will be larger than the K12 sector. Presently, there are only estimates made by consultants who always rely on past statistics versus the future potential.  

Every working professional will need to upgrade themselves or specialize three to four times in their career. Degrees going online will take our level of young Indians having under graduation and post-graduation degrees to a very high level... due to more accessibility of the best universities as also the power and reach of online. The test prep sector is massive (Rs 40,000 crore) market and growing.  

Overall, we see our international growth being also a critical path to our expansion. 

Fundraising is not the best benchmark for a high growth company. Business and profitability are. We are delighted that strong and long-term capital is flowing into this sector and it’s for the entrepreneurs and founders to be wise of the capital spends for what is a very unique opportunity for one or two global players emerging from India.