Earlier this week, Blackstone announced that it is acquiring a majority stake in California and Bengaluru-based edtech startup for $250 million.
“We are excited to partner with Blackstone, a globally recognised investor with a strong track record in the edtech sector. We believe Blackstone can add significant value to our company because of its scale, commitment to building businesses, and global network, which will enable us to develop partnerships with businesses and universities as Simplilearn continues to expand around the world. We would also like to thank our previous investors, Kalaari Capital, Helion Venture Partners and Mayfield Fund for their undaunted support and trust in our journey of becoming a market leader,” Krishna Kumar, Founder and CEO, Simplilearn said in an official statement.
In an interaction with YourStory CEO and Founder Shradha Sharma, Krishna reveals that the majority of finance will go to the existing investors.
Krishna Kumar, Founder, and CEO of Simplilearn in conversation with YourStory CEO and Founder Shradha Sharm
“We always knew that we are building value. In fact, we would not have done the current raise as well if not for the investors as the majority of the money is going to my investors. If I have to just quote the numbers, we raised Rs 200 crore, investors will walk away with more than Rs 1,500 crore, so there is a huge outcome for the investors. So, that was a primary objective for our raise and for us even getting the right partner was also very important,” he says.
Founded in 2010, Simplilearn offers over 100 programmes to help early- to mid-career professionals acquire new-age digital skills across cloud, DevOps, data science, artificial intelligence, machine learning, digital marketing, cybersecurity, and many more. It has been profitable for the fourth year in a row.
Simplilearn has been collaborating with educational institutes such as Caltech CTME, MIT Schwarzman College of Computing, UMass Amherst, the Isenberg School of Management, Purdue Online, Jagdish Sheth School of Management, and IIT Kanpur. It has also been working with companies such as IBM, Microsoft, Amazon, Facebook, and KPMG among others.
Krishna explained that with this deal, only one investor instead of three has taken the majority stake in the company.
“What has changed is that from three investors taking majority, now one investor is taking. So, for me, life doesn’t change. In fact, if at all, it only simplifies my life and I must say that my investors were great. If I have to redo this, I will definitely work with them again. They have been very patient throughout the entire journey,” he adds.
Learnings from the entrepreneurial journey
Krishna explains that it is very important for people to do what they like and enjoy, and they are not looking for any form of exit.
This was the mantra behind starting up Simplilearn for Krishna.
“So, I started Simplilearn as blogging, training because I was enjoying that, and then, it became a business which came as a bonus. So, the first thing that I tell any other entrepreneur is that there is no need to get into a trend; don’t do edtech just because it is a hot sector. They need to decide what kind of work really makes them happy and then you will not be waiting for some D-day,” he says.
The founder believes that edtech is not just a business but a mission. He reveals that they also had multiple options for 100 percent exit in this current deal, and with a “better financial outcome”, but they want to continue to build to ensure that a large-sized edtech business comes out of India.
He also adds that it is important for entrepreneurs to surround themselves with good people who will challenge and question them. Apart from this, he also explained that there is no alternative to hard work if one wishes to achieve growth and success.
“I think it goes for any profession that you have to work hard. I don’t think there is any substitute for work. It might be smart, but if you are not really putting in a lot of effort and time, it’s not going to work,” he says.
Simplilearn positions itself as an online bootcamp for digital economy skills. It is aimed at helping people acquire the skills they need to work in the digital economy. The startup claims to have helped over two million professionals and companies across more than 150 countries to get trained, acquire certifications, and upskill their employees.
Speaking about his entrepreneurial journey, Krishna revealed that he launched his first startup in 2000, which was later acquired in 2007 at a time when the startup ecosystem was not completely ready. Post his exit, Krishna started Simplilearn as a blog.
“I never had thought about like this will become a full-time business and it will become a company where we will raise funding because the last company we didn’t raise any money…Just the four of us co-founders did very well, made good money, and it was a good outcome. But I raised money for this because at that time, the startups ecosystem had started evolving,” he adds.
He explained that Simplilearn raised its first funding in 2012 from Vani Kola, Managing Director at Kalaari.
“When I pitched to Vani, I was doing a monthly revenue of $100,000 while my cost was only $25,000, so there was absolutely no need for me to raise money. But she explained that easy businesses will be easier for others to replicate so I needed to raised funds to build differentiators and so on,” he says.
Simplilearn raised its first three rounds in quick succession, raising its second round from Helion Venture Partners in 2013, and from Mayfield Fund in 2014 and 2015.
However, in 2016, the company had to make a shift in the model. Simplilearn has ramped up its business – both online and offline, where it was conducting 500 offline classes across 100 cities over the world, along with its online model resulting in “chaos”.
“In 2016, we took this decision that we will completely exit offline and only focus on online. The net result was that 75 percent of our revenue was down. After that, it took us some time to build. So, when we started building from scratch, we got into building it so much that we didn’t think of raising money for the next three to four years. By 2018-19, we started getting a lot of offers to acquire 100 percent, mostly from outside India players. We also had an internal discussion with the investors, thinking about whether we should exit or not. Then COVID-19 came and obviously, things started accelerating,” he says.
Krishna Kumar, Founder and CEO, Simplilearn.
Business strategies and plans
Krishna reveals that he follows his philosophy of being calculative with finances:
“I can also tell you that this might not necessarily be the greatest strategy in the current time, like if I have to reflect back…a lot of entrepreneurs who have raised a lot of money are doing various things and are growing very well. So, it is not that they’re being very prudent on revenue or are being focused only on strategy. Maybe that strategy worked for us because of the environment in which we are operating,” he adds.
He explains that the money that the startup has raised from Blackstone needs to be utilised the right way.
According to Krishna, a lot of the capital will be deployed for building new ideas, new business, expansion into new geographies, and building newer products.
“The way we are thinking about it is that there is a business as usual that needs to run with the same fundamental focused approach. But we need to build new businesses, and new business requires investment. So, a lot of money will go into building new or newer ideas, new business, new geographies, newer products. So that’s where you’re going to look at investing that,” he adds.
Listen to the entire conversation here.