Ronnie Screwvala's Upgrad Education is close to buying the American online education company Udacity, The Economic Times reported.
Upgrad is also looking to rasie around $100 million from investors, with 80 per cent of that amount earmarked for the Udacity deal. Screwvala, who owns a significant stake in Upgrad, is expected to contribute his own funds in this funding round, the report added.
The company has sought external investors for approximately $50-60 million, and the remaining funds will likely come from existing investors like Temasek. Although the acquisition talks began last year, the new funding round's details are still being worked out, and Upgrad's valuation is unlikely to increase from its last assessment of $2.5 billion. In 2023, the Indian edtech sector faced challenges, notably at Byju's, which affected investor interest.
“The due diligence at Udacity is at a very advanced level now and law firms have been appointed who are in the middle of the process,” a person aware of the details said to the platform. “The new financing being planned is linked to the Udacity deal.”
The Mubai-based edtech is now expected to acquire Udacity for around $80 million, a bit lower than the previously discussed $100 million. The acquisition is targeted to be finalized within the current financial year, the report added citing its sources.
California-based Udacity provides courses covering data engineering, business analytics, artificial intelligence, data science, product management, and more. Its primary focus is on three key areas: individual learners, government partnerships, and enterprise solutions. While the enterprise segment is Udacity's main source of revenue, it has faced challenges in customer retention.
Founded by Sebastian Thrun, Udacity achieved a valuation of $1 billion in 2015 after securing $105 million in funding from investors such as Germany’s Bertelsmann and Scotland’s Baillie Gifford. Silicon Valley's Andreessen Horowitz, also known as a16z, is another notable investor. Thrun, who is also the founder of Google X and worked on projects like self-driving cars and Google Glass, has played a significant role in Udacity's development.
Mayank Kumar, the co-founder and managing director at UpGrad, mentioned in a statement during the FY23 financials that the company is actively exploring both organic and inorganic expansion. They anticipate achieving operating profitability in the second half of the current quarter.
In the first week of January, the company announced the appointment of C.P. Gurnani to its Board of Directors. He became the second non-executive director after the company announced the appointment of Chegg’s Dan Rosensweig in March last year.
