Edutechs Byju's & Doubtnuts break the deal
2020-11-02The conversation between edtech platforms Doubtntus Byju’s seem to have turned sour over valuation, confirms sources aware of the development. Advance talks between both the companies were on since late June.
“Doubtnut said no to the deal because of the revision of the offer. Byju’s agreed to acquire Doubtnut in the range of $130 million, but it reduced the valuation by $40 million to $80-90 million in the final offer,” said one of the people on condition of anonymity.
“Byju’s revised the offer after completion of due diligence.”
Though it’s not clear what led Byju’s to reduce the valuation by 30%, says a source, the outcome of diligence was one of the reasons for the revision of the offer.
“Doubtnut rejected the final offer as it believes that raising capital and scaling up won’t be challenging, especially at a time when the adoption of edtech platforms are an all-time high,” said the second source requesting anonymity.
According to App Annie Data, Doubtnut’s daily active users or DAU grew from 348K in December 2019 to 533K in October 2020. Doubtnut saw a surge from 1.25 million in December 2019 to over 2 million in September 2020.
Doubtnut has raised around $19 million from the likes of Tencent Holdings, Sequoia Capital, Omidyar Network and Waterbridge Ventures among a few others. In January this year, the firm had raised a $15 million Series A round.
The platform provides instant solutions and clears doubt through pictures and videos. Its core audience consists of K12 segment and JEE aspirants.
“Since Byju’s deal is off the table now, Doubtnut has begun early talks with potential investors including existing ones to raise a Series B round,” said the person quoted at the beginning of the story.
With students across India turning to online education due to the pandemic, edtech platforms have gained immense attention and momentum since the beginning of this fiscal. The segment has witnessed enormous interest from venture capitals. Byju’s alone raised over $1 billion and added $3.5 billion in valuation in 2020 while Unacademy entered the unicorn club.
After raising sizable rounds, Vedantu and ClassPlus are in advanced talks to raise large financing. Google-backed Cuemath also appears close to corner up to $40 million.
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