Is the Khan Academy better than BYJU's

"Byju’s": Millions of users use the application of the Indian start-up

The Indian's work has also attracted the attention of investors. His start-up for online teaching, known under the brand name Byju’s, is considered one of the world's most valuable providers of educational technology. After a new round of investments in July, the valuation rose to $ 5.5 billion. This makes the company one of the “unicorns” of India, those young companies that are valued at at least one billion dollars.

The high rating reflects the importance that the company has earned on the Indian education market within a few years: Byju’s learning apps are almost as well known among schoolchildren on the subcontinent as Lamy pens or pocket calculators from Texas Instruments are in Germany. Most recently, the company had 35 million registered users. It thus reaches more than three times as many learners as the state school system in Germany.

Byju’s sees itself as a kind of online tutoring school. With learning videos and games, the start-up app is aimed at students from first to twelfth grade. Mathematics and natural sciences in particular are on the digital timetable. Individual lessons - adapted to the Indian curriculum - revolve around topics such as right triangles, the periodic table of the elements or the functionality of electricity.

In the cinematic teaching units, Byju’s relies on young teachers to whom one likes to listen - and graphics that are supposed to make complicated concepts clear. There is a practice test for each chapter. If there is still some catching up to do, students are guided back to the basics. Parents, in turn, can use their own apps to track their children's learning progress.

In a country with chronic problems in the public education system, Raveendran's offer is met with great interest. In Indian cities, two-thirds of schools are considered overcrowded with more than 35 students per classroom. Every third school lacks a power connection. 70 percent of students fail to graduate from twelfth grade.

Technology solves school problems

Raveendran believes he can use technology to solve many of the problems. "We have to arouse the children's curiosity again," he said in an interview on Indian television at the end of August. He presents his apps as a means for greater educational equality: technology can adjust the starting conditions for students on the subcontinent. In order to be taught by highly qualified teachers, one no longer has to go to expensive private schools. With his apps, ambitious youngsters who are hungry for advancement would also get a fair chance in remote villages.

The interest is great. A study by KPMG and Google from 2017 assumes that the market for online teaching in India will grow to two billion dollars by 2021 - from 250 million dollars in 2016. A study by the semi-governmental business development agency IBEF estimates the segment to be even larger ein: Accordingly, there is already talk of a sales volume of 5.7 billion dollars in the coming year.

Raveendran already experienced at the beginning of his teaching career how great the demand is for educational offers that promise pupils and students concrete career advantages - long before teaching via the Internet was an issue in India. Raveendran comes from the coastal village of Azhikode in the southern Indian state of Kerala.

He attracted attention early on with his talent for mathematics and later studied mechanical engineering. At the turn of the millennium he got a job in Singapore. He remained in the academic world because friends asked him for tutoring. They applied for admission to the Indian Institutes of Management - a group of renowned business schools that only a fraction of the candidates make it into.

Raveendran helped his friends get a good test result and took the entrance exam himself for fun: He did better than 99 percent of the participants and received offers for MBA study places from all over the country. Raveendran declined, however, and did not revisit the subject until two years later when he returned to India for vacation in 2005. Meanwhile, word of his qualities as a tutor had got around. Within six weeks he was tutoring more than 1,000 students in Bangalore.

The success and fun he had while teaching led him to embark on a new career path. Raveendran gave up his mechanical engineering job and became a full-time tutor. First he filled auditoriums with more than 1,000 seats and commuted between metropolises such as Pune, Delhi, Chennai and Mumbai. Then he built his stage in sports stadiums and had more than 20,000 spectators there. Instead of sporting performances or pop music, Raveendran attracted the masses with math tuition.

Because he couldn't perform everywhere at the same time, Raveendran began distributing videos of his lessons ten years ago. He thus laid the foundation stone for his company Think and Learn, which is the owner of Byju’s. With a team of 30 employees, he expanded the offer.

Instead of just dealing with the material for entrance exams, content was added to the normal curriculum. In 2015 Byju’s launched its first app. The content is not cheap: For example, access to the math and science course for the sixth grade costs the equivalent of more than 300 euros.

But there are obviously enough buyers: Sales in the past fiscal year almost tripled to around $ 200 million and are expected to more than double this year. At the same time, the company came into profit for the first time in 2018, according to Raveendran. With this, Byju’s has developed a unique selling point among India’s unicorn start-ups.

Profitability not yet achieved

Some unicorns exist on the subcontinent. But some of them are still a long way from being profitable. The payment service Paytm, for example, which works with mom and pop shops as well as large e-commerce platforms, expects to become profitable in 2021 at the earliest.

Start-ups such as the online retailer Flipkart, which was taken over by Walmart in 2018, and the taxi app service Ola are still deep in the red. The reason: They are fighting an expensive discount battle with their respective competitors in the battle for the 1.3 billion inhabitant market in India - so Flipkart fights against Amazon, Ola against Uber.

Byju’s, however, has no comparable competitor. The app dominates the Indian online education market, in which smaller providers such as Toppr, Khan Academy and Vedantu are also active. The start-up challengers want to catch up. Toppr founder Zishaan Hayath spoke in May of wanting to increase his user numbers from the current eight million to 20 million by 2020.

His offerings include more subjects than Byju‘s, including English, history and geography. In addition, Hayath believes that it will motivate the students more: "The average usage time per day for Byju’s should be around 50 minutes," he explained. "With us it's 110 minutes."

However, investors prefer Raveendran's app. While Toppr received $ 35 million from a private equity firm at the end of last year, Byju’s raised $ 540 million - including from South African technology investor Naspers and Canadian pension fund CPPIB.

In July, a further $ 150 million was added to a round of investments led by Qatar's QIA sovereign wealth fund. Byju’s investors, one third of which is reportedly still owned by the founder and his family, include the Chinese technology group Tencent and the Chan Zuckerberg initiative, which was founded by Facebook boss Mark Zuckerberg.

Open up new markets

Observers believe that the market will remain in the focus of venture capitalists: Investors continued to show great interest in the growth opportunities, commented Ankur Pahwa, partner at the consulting firm EY in India: "India is still an underserved market for educational technology."

With the money from the investors, Raveendran wants to push the international expansion. As a first step, he bought the Californian start-up Osmo, which produces augmented reality educational games, for $ 120 million at the beginning of the year. Osmo technology is already integrated in Byju’s new learning app: the camera on tablets or smartphones detects how the worksheets supplied have been filled out.

The product has been on the market in India since the summer and, according to Raveendran, will soon also be available abroad. The app is currently being adapted to the American and British curriculum, he said. Other English-speaking countries such as New Zealand and Australia are also interesting expansion targets, the company said.

However, Raveendran still has a lot to do with the learning videos that he has been using in the apps for older children - even though they are in English: The Indian accent is considered difficult to understand abroad. Raveendran therefore wants to hire teachers from the respective markets to take up more than 1000 new lessons. His goal: "We create an international platform."

The series

The start-up scene describes young companies valued at at least one billion dollars as the “unicorn”. More and more start-ups around the world are attracting venture capital. The Handelsblatt correspondents have selected unicorns in their reporting area whose development particularly impressed them. They also describe the conditions for emerging companies and investors in their respective countries. In the coming week, correspondent Klaus Ehringfeld from Colombia will report on a start-up.

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