Last fortnight, Indian ed-tech startup Eruditus raised $650MM from marquee global investors at a $3.2Bn valuation, becoming India’s 3rd largest EdTech. 

Sapere Aude: Dare To Know

The year was 2003, an ambitious CA named Ashwin Damera was, as per convention, working his way up the ladder as a risk manager at a reputed international bank.

Little did he know that he was on the cusp of a non-conventional ride spanning multiple decades.

With a combination of grit and hard work, Ashwin would break into Harvard Business School.

He would end up meeting professors who would open up his mind, diverse batchmates who’d change his worldview and more importantly; founders who’d give him the entrepreneurship bug,

This would seed the idea for his first startup, Travelguru.

Travelguru was started in 2005 to serve as India's first one-stop travel portal. Although scaling quickly from just offering flight tickets to even providing hotel bookings, Travelguru would face financial issues. 

During the 2008 financial crisis, that deeply affected travel, it would end up being sold to a large travel aggregator called Travelocity in 2009, which would later be acquired by Yatra in 2012.

A Course on the Crisis, obviously

Building on lukewarm success from his previous startup’s sale, Ashwin would end up learning invaluable lessons from the travel industry. The power of network effects, the perils of a small and competitive space, and the risk in maximising valuation.

Ashwin would soon end up meeting his future co-founder, Chaitanya Kalipatnapu, yet another MBA graduate who had recently graduated from INSEAD in France.

In 2010, armed with lessons from a previous startup and their shared experiences of studying at prestigious educational institutions around the world, the two would end up starting up a company in the executive education space.

Eruditus was born.

The premise of starting Eruditus was simple. Universities have built an amazing business model around rejecting people. 

Education significantly changed the founders’ lives, but can it be used to change others’ lives too?

They dove in.

Ad Astra Per Aspera: Through Hardships to Stars

In 2010, when Eruditus was started, Ashwin opened his innings with a course that flopped.

Back in the day, Harvard used to run a four-day executive programme in India at about Rs 1.5 lakh. IIMs used to have a five-day programme for professionals between Rs 50,000 and Rs 1 lakh.

Ashwin had a thrifty idea. He recruited two professors from IIM-A and INSEAD, and rolled out a 10-day programme in a 5-star hotel for Rs 50,000.

No fancy tech, no venture funding and more importantly, no internet. He even marketed the course as “5x the value” The course, unfortunately, was a disaster. 

12 people showed up. 

The reasons for failure seem obvious, in retrospect, of course.

Firstly, they were teaching extremely small cohorts of less than 50 people, stripping them of the power of network effects.

To add to it, these courses could be done only during the off-season for universities, when these professors would fly down for lectures.

It was also a hectic schedule for the professors.

A Professor would land at about 2 am, give 8am lectures stretching through the evening for three days straight, and fly back on the third night.

Although the course failed due to a multitude of reasons, Ashwin and his co-founder Chaitanya noticed specks of hope in the form of a silver lining.

They saw that the students were showing up every single time. The attendance was on point.

Even the professors stuck to the gruelling schedule and seasonal classes because they liked it. They saw value in what Eruditus was trying to do.

Unfazed by the failure of the first course, the founders realised that they had something special in their hands and decided to double down on it.

Alea Iacta Est: The Die is Cast

In the broader ecosystem, the Edtech world was changing.

Startups like Unacademy and Byju's were gaining traction in the online segment. MOOCs were on the rise.

By 2014, there were close to 2,400 MOOCs registering close to 16.5M students.

Companies like Coursera, edX and Udacity were partnering with top universities and providing a vast array of short courses online.

The MOOC that made a star out of Andrew Ng

Even at this time, Eruditus was an entirely offline service.

Despite their ability to attract interest from top universities around the world, the company wasn’t able to raise funding from investors. It was rejected by 20 VCs in 2015.

Given the in-person delivery model, investors weren’t able to see a market with a large enough TAM for a successful venture capital investment.

Eventually, the company raised $1M from friends and family.

Post raising money, they made what would become a pivotal decision to start providing courses through their online learning division, Emeritus.

Growing slowly but steadily, it took Ashwin 6 years to get Eruditus to become a profitable enterprise with $10M ARR and growing steadily.

On the back end, the team worked from the ground up to provide these institutions a full suite of services from slide making, to video editing and providing a state of the art LMS (Learning Management System).

Eruditus’ online journey had begun.

Audentes Fortuna Iuvat: Fortune Favours the Brave

Eruditus continued to focus on creating short to long courses for experienced professionals - with 5 to 10 years of experience  -  in fields such as management, leadership, banking and finance.

They would either help you take it to the next level in your own field, or help you pivot to a new field itself, depending on what you study.

In 2015, while Eruditus remained completely bootstrapped, there was a funding frenzy going on in the Indian startup ecosystem.

With big names like Housing, Flipkart and Snapdeal raising bucket loads of money, it would have been only natural that Eruditus also dip its beak in the funding frenzy.

However, Eruditus did not dip in the bucket.

Ashwin remembered an important lesson from B-school. The best form of fundraising is from customers. He stayed laser focussed on trying to find models where the LTV minus CAC is positive.

Eruditus would continue to silently build partnerships with colleges.

Around the same time, INSEAD was keen to scale its Executive Education offering and had plans to have a management course in India. Eruditus pitched them a multi-modular format for teaching senior executives.

INSEAD was sold.

With the wind in their sales after landing INSEAD, Eruditus forged partnerships with Harvard, Wharton, the Massachusetts Institute of Technology (MIT), and others, silently courting Ivy league giants, one by one.

They also expanded their footprint to a global market by setting up classes in Southeast Asia and Dubai.

Eruditus was now ready to hit the gas pedal and accelerate their vision.

Timendi Causa Est Nescire: Ignorance Drives Fear

As soon as Eruditus started offering courses online, they realized that the whole world was their playground.

Students across the world and not just India could access quality high-impact education through their online courses. This enabled the growth to 2X-3X.

In 2017, Eruditus raised its first institutional funding. It looked like they finally had found an investor who corroborated their vision to go global.

The investors found Eruditus to be an important player in strategic growth areas like India and South East Asia for higher education.

By 2017, Eruditus already had 5000 students across 50 countries. Eruditus' model of classroom, online and blended mode was working.

By 2018, Eruditus had set plans to expand in markets like China and Latin America.

At that point, nearly half of their customers were coming from these regions, with the other half coming from the US and India.

To bridge the demand-supply gap for topics like Artificial Intelligence and Machine Learning, the company planned to create new courses by increasing tie-ups with US and European universities.

The timing was perfect. India had already started gaining a lot of investor attention for its blooming EdTech industry.

The market growth was also led by the growing interest of individuals to upskill/ reskill themselves to prepare themselves for the job market. Corporate tie-ups with educational institutions were also on the rise.

Eruditus already was serving clients like Reliance Industries, Microsoft, TCS, Asian Paints, etc.

In January 2019, they raised $40M to work on the plan to expand - both in the number of courses and geographically.

After years of quiet, Eruditus was finally taking off globally. 

Aut Viam Inveniam Aut Faciam: I Shall Find a Way or Make It

As Eruditus set up on the path of global expansion, their key goal was to create more immersive content while also expanding in multilingual offerings to cater to individuals from all around the world.

In 2019, Eruditus enrolled 30,000 students from 80 countries, almost 6 times the number of students compared to 2017.

Why were people signing up for a service like Eruditus rather than the better known MOOC providers?

For one thing, the students learned together in cohorts at the same time period from the same teacher. The completion rate for Eruditus courses was almost 85-95% whereas it was 15% on average for MOOC.

Eruditus, from its learning in its first year, had realized cohort-based learning was more effective than MOOCs. 

Adopting SPOC (Small Private Online Courses) over the self-paced MOOC was a clear gamechanger and a sign of a market need that MOOCs had overlooked.

Eruditus was clear that the focus was on the outcome and not merely providing quality education.

The outcome here was to either help a professional level up in their current industry or enable them to change their industry.

They had all the help they needed.

They had solid backing from acclaimed professors from top universities to build and scale this new category of SPOC. They used approaches like gamification, simulations and continuous feedback to students. 

Providing live interactions with the faculty also proved to be beneficial in creating active learning.

Eruditus was truly re-defining learning, step by step. The hook would become their focus on SPOCs versus MOOCs.

Dulce Periculum: Danger is Sweet

Eruditus’ long standing relationship with top institutes gave it the time and expertise to develop a nuanced offering, for both students and professors.

As we discussed above, the most common approach to online courses and also one of the fastest growing models in the ed-tech space was the MOOC model. 

MOOCs were extremely low-touch, in that they offer recorded sessions and assessments, and are open to a very large number of students. Even with the introduction of micr byodegrees and capstone projects, the lower engagement in MOOCs resulted in completion rates that hovered around the 40% mark.

What Eruditus’ online courses offered were an environment to attract a diligent set of students who seeked live faculty teaching, subjective assessments and adaptive grading, and the opportunity to work on real world projects and collaborate with a global cohort in real-time. 

With the extensive use of simulation and gamified remote learning, the SPOC model ensured high amounts of engagement. Completion rates soared to 80%, nearly doubling with this high-touch approach.

The goal was to simulate the offline classroom experience in the best way possible. Operating at the sweet spot between MOOCs and one-on-one tutoring approaches, Emeritus offered a way for universities to broaden their reach as well.

Universities had built great brands through research and teaching. They wouldn’t necessarily want to make the broad investment into building an online distribution channel from scratch.

They did not have the bandwidth to spend a large amount of time on studying the data and curating specific courses for part-time students and they didn’t have the feet on the ground in India or Dubai or Mexico to ensure the successful implementation of the courses rolled out.

Emeritus had the infrastructure to amplify the reach of the intellectual resources that universities offered.

The courses cost anything between $5,000 and $40,000. The university’s take rate varied from as low as 25% to as high as 70%, depending on its rate of involvement, as well as its reputation. 

In-class teaching, or higher involvement in assessment and grading would result in higher take rates.

A business model for SPOCs was coming into shape. The cohort based courses for university learning were taking off. 

Eruditus was clearly at the forefront of the industry.

Non Ducor Duco: I’m Not Led, I Lead

In a space that has tech-celerated since the onset of COVID-19, one can be certain that there isn’t just one player bringing quality education to customers via partnerships with universities.

The recent boom in business has opened up limitless possibilities, and paved the way for the flourishing of many contrasting business models, and the meteoric rise of many companies.

Mapping the global market, much of the competition to Emeritus’ offerings come from 2U, Keypath and HotChalk.

2U, a company based out of the United States that started off as a SaaS startup which partnered with non-profit colleges, recently decided to add fees amid fierce competition in a rapidly changing market. Its recent $800m acquisition of edX helped it reach 50 million learners globally, serve more than 230 partners, and offer over 3,500 digital programs.

Keypath, which has a strong presence in the Australian subcontinent, operates as a white label online education solution for brick and mortar institutions; partnering with the local universities such as UNSW and the University of Technology Sydney, as well as international players like Florida State University and Suffolk University Boston.

Locally, the aggressively expanding upskilling segment, comprising the likes of upGrad, Simplilearn, Great Learning and Jigsaw Academy, is presenting many interesting alternatives to executive education.

upGrad’s student-application model ensures the selection of dedicated candidates; a key component of its program pricing, given that 50% of the program fees are collected from the learner only if they get placed after the program's completion.

Its enterprise arm provides services to companies that have identified gaps in their employees’ skill-sets and want to fund their upskilling endeavours.

With a formidable set of income streams, strategic acquisitions (the most of which is KnowledgeHut), and tie-ups with the best institutions in India, upGrad is cruising at a 1200 Cr ARR.

Its high-touch offering that was announced last year, upGrad LIVE, presents direct competition to Emeritus in many aspects.

Similarly, Simplilearn, with the help of its partner WebEngage, is tackling the high course dropout issue using a live-learning Bootcamp model, boasting of a 80% course completion rate.

Great Learning, meanwhile, has joined Byju's umbrella in a $600m acquisition. This was clearly a crowded space. 

Eruditus realized that the market size they were tackling wasn’t a winner-take-all market.

Ad Meliora: Towards Better

The Indian ed-tech space as a whole has been bustling, with stratospherical amounts of funding pouring in and a very large number of M&As being carried out. 

But as they say about every “overnight” success, this is the result of an entire decade of hard work. 

Byju’s started as a stealth startup back in 2011, launching their app only in 2015. The next 6 years for Byju’s could not have been predicted even by the most eminent pundits.

As for Eruditus, the foundation laid by the team has been the key to the company’s differentiation from competition and all the subsequent success it has witnessed.

The company reached its break-even point in June 2020. It reported a $350M revenue run rate for the year.

With the recent funding of $650m, its post-money valuation is a mammoth $3.2bn, making it the largest Indian startup in the higher education space.

To put things in perspective, Eruditus’ target revenue of $500m will make it larger than Coursera (~$400m, a public company now) by 2022.

The competition is fierce, with K12 players now eyeing ways to enter the upskilling market. Unacademy has displayed interest in the space after its recent fundraise. Byju’s has already made a move with the Great Learning acquisition.

But why should the K12 favorites have all the fun? 

The $200M acquisition of iD Tech, a California based startup that offers online coding camps and tech courses targeted at youngsters, marked Eruditus’ entry into the K12 segment.

With players like upGrad and Simplilearn, which started off with short-term offerings and are now deepening their product line by adding live sessions, Eruditus is evaluating the addition of micro learning programmes to its own arsenal. 

The quoted capital expenditure for the creation of a new course is $100,000. Eruditus plans to add 300 new courses to its offerings, amounting to a $30m expenditure from its most recent fundraise.

On the path to enroll a million students, Eruditus will need many more Indians to participate, and feels like it might have to introduce products at lower price points.

Emeritus Insights is a recently launched INR 7000 subscription course, which presents a collection of the best insights from its courses and faculty, converted into bite-size lectures on specific topics.

Byju’s and Unacademy may be the K12 behemoths, but with the lines between the various ed-tech spaces blurring quickly, Eruditus has emerged as a key player to watch out for. 

It is already playing the advantage with its glamorous line of partnerships with the world’s top universities.

Eruditus is also daring to innovate, is exploring structures wherein students spend a year in an Indian college, and the remaining three in a college abroad.

Owing to the strong bond it has with universities abroad, Eruditus might just be the pathway through which education truly becomes global.

Writing: Bhoomika, Chetan, Shelley, Shiraz and Aviral | Design: Abhinav, Mehak

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