Byju’s buys Osmo for $120M to add blended learning to its $4B digital education business

Weeks after it raised a massive $540 million funding round, Indian education unicorn Byju’s is on the M&A path. The company announced today it has snapped up U.S-based Osmo, a startup that develops apps for kids that use offline input, in a deal worth $120 million. Osmo has raised over $30 million from investors that […]

Weeks after it raised a massive $540 million funding round, Indian education unicorn Byju’s is on the M&A path. The company announced today it has snapped up U.S-based Osmo, a startup that develops apps for kids that use offline input, in a deal worth $120 million.

Osmo has raised over $30 million from investors that include Mattel, Sesame Workshop, Upfront Ventures, K9 Ventures and Accel. They were offered a cash option but elected for an all-stock payout, Osmo CEO Pramod Sharma told TechCrunch in an interview. That, he added, is a “validation of the level of confidence” that they have in Osmo combining its resources with Byju’s, which is valued at nearly $4 billion from that recent funding round that featured Naspers, Tencent and others.

Founded by former Googlers Sharma and Jerome Scholler, the Osmo service was launched at TechCrunch’s Startup Battlefield in 2013, when it was initially called Tangible Play. The company combines the benefits of digital and offline learning using a dozen or so apps that tie into customized hardware, that’s a base designed for iPads or Amazon Kindle Fire tables alongside a red reflector and game pieces — as pictured above.

The result is ‘blended learning’ apps that integrate offline activities, varying from drawing to math, spelling and even making pizza, to help children aged between 5 and 12 learn. Currently, Sharma said, it is used in around 20,000 schools and it has reached around a million families, 90 percent of which are in the U.S.

That puts it squarely into the bracket of companies that Byju’s founder Byju Raveendran told TechCrunch that his company was seeking to snap up using its newly-acquired war chest.

In an interview announcing the fund last month, Raveendran said he wanted “product-based acquisitions that will be value-adds on top of our core product.”

Byju Raveendran founded Byju’s as an offline learning center business in 2008, today it is worth nearly $4 billion thanks to a thriving digital education business with over a million paying customers. Photographer: Dhiraj Singh/Bloomberg

In that respect, Osmo is an ideal complement to Byju’s existing business, which covers educational courses for grades 4-12 using a combination of videos, games and other materials and counts. It currently counts 30 million registered students to date and 1.3 million paying users with a specific focus on India. But, with its new funding in the bank, it is preparing a new service that will offer a number of courses in English for children aged 3-8 based across the world.

Raveendran and Sharma said that the immediate plan post-acquisition will see a huge increase in content for the Osmo platform, while the price of the hardware — which currently ranges from $99-$189 — may also be reduced to help grow the audience beyond its current base.

“For us to grow, we need to invest in content,” Sharma said. “We have a lot of ideas [and] have proven a set of interactions, [but] a lot can be expanded with more content and levels. We’ve proven this is a compelling platform for learning, and we are nowhere close to scaling it… our goal is to get it to every child.”

Osmo offers three different packages to customers wishing to buy its equipment for children

Echoing those comments, Raveendran said Osmo can “reach its maximum potential” with more content while he stressed that there is plenty of cross-pollination potential between the two companies.

“We’re asking: ‘How can we bring some of the offline learning kids do, is there a way to capture that back onto the app and personalize the learning experiences further?'” he said. “There’s overlap between Osmo users and the products we are building [so] how we can use that for multiple education use scenarios, even possibility for higher grades?”

Ten-year-old Byju’s started out in offline learning before moving into digital courses in 2015. Its push online has seen it do a number of deals and Osmo represents its fourth acquisition. But beyond being its most expensive, Raveendran hailed the acquisition as his company’s “most important” deal to date.

“We have video as a format, games as a format, and we think of Cosmo like a format… we could have thousands of supported apps,” he told TechCrunch by phone. “Education is not purely an online experience, especially for younger kids [so] the potential is huge if there’s a clear online-to-offline application.”

Byju’s buys Osmo for $120M to add blended learning to its $4B digital education business

Weeks after it raised a massive $540 million funding round, Indian education unicorn Byju’s is on the M&A path. The company announced today it has snapped up U.S-based Osmo, a startup that develops apps for kids that use offline input, in a deal worth $120 million. Osmo has raised over $30 million from investors that […]

Weeks after it raised a massive $540 million funding round, Indian education unicorn Byju’s is on the M&A path. The company announced today it has snapped up U.S-based Osmo, a startup that develops apps for kids that use offline input, in a deal worth $120 million.

Osmo has raised over $30 million from investors that include Mattel, Sesame Workshop, Upfront Ventures, K9 Ventures and Accel. They were offered a cash option but elected for an all-stock payout, Osmo CEO Pramod Sharma told TechCrunch in an interview. That, he added, is a “validation of the level of confidence” that they have in Osmo combining its resources with Byju’s, which is valued at nearly $4 billion from that recent funding round that featured Naspers, Tencent and others.

Founded by former Googlers Sharma and Jerome Scholler, the Osmo service was launched at TechCrunch’s Startup Battlefield in 2013, when it was initially called Tangible Play. The company combines the benefits of digital and offline learning using a dozen or so apps that tie into customized hardware, that’s a base designed for iPads or Amazon Kindle Fire tables alongside a red reflector and game pieces — as pictured above.

The result is ‘blended learning’ apps that integrate offline activities, varying from drawing to math, spelling and even making pizza, to help children aged between 5 and 12 learn. Currently, Sharma said, it is used in around 20,000 schools and it has reached around a million families, 90 percent of which are in the U.S.

That puts it squarely into the bracket of companies that Byju’s founder Byju Raveendran told TechCrunch that his company was seeking to snap up using its newly-acquired war chest.

In an interview announcing the fund last month, Raveendran said he wanted “product-based acquisitions that will be value-adds on top of our core product.”

Byju Raveendran founded Byju’s as an offline learning center business in 2008, today it is worth nearly $4 billion thanks to a thriving digital education business with over a million paying customers. Photographer: Dhiraj Singh/Bloomberg

In that respect, Osmo is an ideal complement to Byju’s existing business, which covers educational courses for grades 4-12 using a combination of videos, games and other materials and counts. It currently counts 30 million registered students to date and 1.3 million paying users with a specific focus on India. But, with its new funding in the bank, it is preparing a new service that will offer a number of courses in English for children aged 3-8 based across the world.

Raveendran and Sharma said that the immediate plan post-acquisition will see a huge increase in content for the Osmo platform, while the price of the hardware — which currently ranges from $99-$189 — may also be reduced to help grow the audience beyond its current base.

“For us to grow, we need to invest in content,” Sharma said. “We have a lot of ideas [and] have proven a set of interactions, [but] a lot can be expanded with more content and levels. We’ve proven this is a compelling platform for learning, and we are nowhere close to scaling it… our goal is to get it to every child.”

Osmo offers three different packages to customers wishing to buy its equipment for children

Echoing those comments, Raveendran said Osmo can “reach its maximum potential” with more content while he stressed that there is plenty of cross-pollination potential between the two companies.

“We’re asking: ‘How can we bring some of the offline learning kids do, is there a way to capture that back onto the app and personalize the learning experiences further?'” he said. “There’s overlap between Osmo users and the products we are building [so] how we can use that for multiple education use scenarios, even possibility for higher grades?”

Ten-year-old Byju’s started out in offline learning before moving into digital courses in 2015. Its push online has seen it do a number of deals and Osmo represents its fourth acquisition. But beyond being its most expensive, Raveendran hailed the acquisition as his company’s “most important” deal to date.

“We have video as a format, games as a format, and we think of Cosmo like a format… we could have thousands of supported apps,” he told TechCrunch by phone. “Education is not purely an online experience, especially for younger kids [so] the potential is huge if there’s a clear online-to-offline application.”

Food delivery startup Swiggy raises $1 billion more from Naspers, Tencent and others

Naspers, the South African investment giant, is back at it again in India! Days after backing educational startup Byju’s by leading a $540 million investment, it has led a $1 billion investment in food delivery company Swiggy. The new round sees Chinese internet and Naspers ally Tencent join the party, alongside fellow new investors Hillhouse Capital […]

Naspers, the South African investment giant, is back at it again in India! Days after backing educational startup Byju’s by leading a $540 million investment, it has led a $1 billion investment in food delivery company Swiggy.

The new round sees Chinese internet and Naspers ally Tencent join the party, alongside fellow new investors Hillhouse Capital and Wellington Management Company. Existing backers returning to take part in this round include DST Global, Meituan Dianping and Coatue Management.

The deal is the largest investment in a food delivery company outside of China, and it means Swiggy is one of the view in the billion-dollar-round club. Others include Flipkart, which is now owned by Walmart, and OYO, which raised $1 billion from SoftBank’s Vision Fund, Southeast Asia’s Grab and others in September.

Swiggy was founded in 2014 and it claims to work with 50,000 restaurants in more than 50 cities in India. That’s up from 35,000 restaurants six months ago and the company claims it has doubled its GMV over that same period, although — like most private companies — it didn’t divulge specific data.

Swiggy’s closest competitors include fellow unicorn Zomato, Ola-owned FoodPanda as well as Uber Eat, which came to India around 18 months ago.

The deal is a real triple down on India and Swiggy from Naspers, which has just seen the valuation of Byju’s soar to some $3.7 billion up from under $1 billion last year and first backed Swiggy in February before going back for more in June.

You’d imagine that the Naspers link is also a major factor behind Tencent’s arrival. The South African firm is (famously) an early investor in Tencent and, despite a well-reported share sale this year, it still maintains around 33 percent ownership in the internet firm — that’s worth around $120 billion as of today’s share price.

The deal takes Swiggy to $1.46 billion raised to date. That most recent June-round was $210 million at a $1.3 billion valuation, but this time around we haven’t been able to get a valuation. (We’re working on it.)

More to follow

Byju’s targets global expansion for its digital education service after raising $540M

India-based educational startup Byju’s was widely reported to have raised a massive $400 million round and now the company is making things official. The ten-year-old company revealed today it has pulled in a total of $540 million from investors to go after international opportunities. The round is led by Naspers, the investment firm famous for […]

India-based educational startup Byju’s was widely reported to have raised a massive $400 million round and now the company is making things official. The ten-year-old company revealed today it has pulled in a total of $540 million from investors to go after international opportunities.

The round is led by Naspers, the investment firm famous for backing Tencent that also includes educational firms Udemy, Codecademy and Brainly among its portfolio. The Canadian Pension Plan Investment Board (CPPIB) provided “a significant portion” of the round, according to an announcement which also revealed that the deal included some secondary share sales. A source told TechCrunch that’s from Sequoia India, an early investor which is cashing in a piece of its winnings.

This round takes Byju’s to $775 million from investors to date. Its backers include Tencent, the Chan Zuckerberg Initiative — from Facebook founder Mark Zuckerberg and his wife — General Atlantic, IFC, Lightspeed Ventures and Times Internet.

The deal takes the company valuation to nearly $4 billion, a source told TechCrunch. That’s in line with what was reported by India media last week and it represents a major jump on the $800 million valuation that it commanded when it raised money from Tencent in July 2017. It also makes Byju’s India’s fourth highest-valued tech startup behind only Paytm, Ola and OYO.

Founded in 2008 by Byju Raveendran as on offline teaching center, it moved into digital courses as recently as 2015. The company specializes in grades 4-12 educational courses that use a combination of videos and other materials. Besides courses, the service covers exams, free courses and paid-for courses.

Byju’s says that 30 million students have registered for its online educational service Dhiraj Singh/Bloomberg

It claims to have registered over 30 million students, while more than two million customers have signed up for an annual paid subscription to date. Raveendran told TechCrunch in an interview that there are currently around 1.3 million paying users. He said that the service enjoys a renewal rate of around 80 percent, and that it is adding 1.5-2 million new students per month, some 150,000 of which are part of paying packages.

English learning for kids worldwide

This new money will go towards globalizing the service beyond India with an international English service for children aged 3-8, an entirely new category for the company, set to launch next year.

Raveendran told TechCrunch that the service will target English-speaking markets, as well as other major international countries including India.

“There’s a growing percentage of people wanting to learn English or [in countries where] it is becoming aspirational. Slowly but surely it is happening around the world,” he said in an interview.

The company will release the new services at the beginning of local academic years — which vary worldwide — with the aim of appealing directly to kids. If the youngsters enjoy the app, parents can buy the full experience for them. It’s a logical way to find a global audience — families prepared to spend on English tuition exist worldwide — whilst also expanding into a new customer base that could become users of the core Byju’s service.

While the company has developed the core content aspect of the service, Raveendran said he is on the lookout for acquisitions and partnerships that can add more to the appeal.

“They will all be product-based acquisitions that will be value-adds on top of our core product,” he said. “Over the last 12 months, we’ve scouted for core product acquisitions but went the other way around and decided to build it ourselves.”

Further down the line, Byju’s may develop more localized services in countries where it sees high demand for the children’s product, Raveendran added.

Byju Raveendran started the company ten years ago, but it entered the digital education space in 2015 [Photographer: Dhiraj Singh/Bloomberg/Getty Images]

Global investor base

That expansion is likely to be influenced by Naspers which has a very global portfolio, including deals in emerging markets like Southeast Asia, Latin America, Africa and Eastern Asia. Indeed, the deal sees Russell Dreisenstock — head of international investments for Naspers — join the Byju’s board.

Tencent also has experience and connections, having backed China’s Yuanfudao education platform, which is now reportedly valued around $2.8 billion. Alongside Sequoia — another Byju’s investor — it is also part of VIPKid, a hugely successful platform that connects U.S-based teachers with English language learners in China.

Despite that, Raveendran said those investments are unlikely to be core to this global push.

“We expect [our investors] to help us finding partners through portfolio companies or others [but] there is no significant overlap with what we will do,” he explained.

In the case of VIPKid, he said that if Byju’s “ever decides to do anything in China” then it is likely that it will complement VIPKid’s tutor-led approach to learning rather than take it on directly.

Still, Raveendran expects the global business to become profitable and self-sustaining within the next three years. Already, the India-based business is profitable as of this year, he said, but its appeal has grown globally somewhat even before this new product launch. Overseas is currently 15 percent of revenue, a figure that the CEO puts down to the Indian diaspora globally.