How this start-up shrugged off a slowdown and snagged cash from Mark Zuckerberg

Indian school children arrive for lessons in New Delhi, India.
Imtiyaz Khan | Anadolu Agency | Getty Images
Indian school children arrive for lessons in New Delhi, India.

One of India's most exciting start-ups is a learning app that promises students studying can be fun.

Named Byju's - after its founder, an engineer who loves to teach - the app is a hit among investors and consumers even as India's start-up industry goes through a churn.

A self-learner, who taught himself English listening to sports commentary on radio, Byju Raveendran, the latest toast of India's start-up industry, wants to take the stress out of learning. The man who has been a "rockstar" teacher helping people across the country crack the tough entrance exam to India's elite management schools, is today the CEO of India's largest funded education technology start-up.

Byju's has inspired investor confidence in an inclement environment for start-ups, many of whom have laid off employees or shut shop completely in recent months.

While funding to start-ups has dropped more than 30 percent on-year so far in 2016, Byju's Learning App has raised a total of $147 million this year, which includes a whopping $50 million investment in September co-led by the Chan Zuckerberg Initiative. This was the first investment in Asia by the foundation set up by Mark Zuckerberg and his wife Priscilla Chan. Besides, a number of big names among venture capitalists like Sequoia Capital and Sofina are also backing Byju's.

While some investors have turned wary amid growing concerns over the sustainability of India's once-fancied start-ups, Byju's has managed to steer ahead. How?

Hungry to learn

Sunil Kalra, who has invested in 50-plus start-ups in India, tells CNBC, "Education is the primary area investors are looking at now. There is a huge hunger and desperate shortage of quality services in this space and Byju's has emerged as a credible player."

The online education market in India is estimated to grow to $40 billion in 2017 from $20 billion in 2015, with the country's kindergarden to high school segment the largest in the world with an estimated 260 million enrolments. While others have balked at the challenges in India's clunky education sector that is riddled with lack of access to good teachers, a one-size-fits all approach and an overpowering focus on exams, Byju's sees opportunities.

In little over a year since its launch, the app has attracted 250,000 annual paid users , according to the company.

The app at present helps students from grades 4 to 12 to learn science and math, and also offers test preparations for engineering and management courses.

Byju's app costs on average Rs10,000 ($150) for an academic year, an expensive sum for many middle-class Indian families, but in an environment where after-school coaching and test-prep classes are mushrooming with few credible options, Byju's has managed to clear the pack. The company claims to be profitable and said revenues in the first five months of the current financial year ending March 31, 2017 had already crossed total revenues earned all of last year.

Mantra for success

Amid the cacophony of schools, teachers and tuition centres promising to make toppers out of your children, Byju's mantra for success is to make the students fall in love with the subject. Learning on the app is through a mix of videos, informal conversations and relating topics to popular sports such as cricket or online games like Angry Birds, for example.

"A one hour chapter is like a one hour movie," says Byju, 36, who says he himself learnt more outside the classroom than inside it. "I am not trying to change the [education] system, it's easier to change the learning habits of an 11-year-old."

An engineer, who started teaching friends as a hobby during his time off from work, Byju realized he was really good when attendance at free workshops for students preparing for the CAT exam, which one needs to take to get into the elite Indian Institutes of Management (IIMs), started doubling every week. He also took the exam twice to test his own teaching methods and topped it on both occasions, but never got tempted to join the IIMs.

Byju was soon taking classes in stadiums packed with 1,000 students. He quit his job and moved to teaching full time. In 2009 he converted his workshops into video based classes so that he could reach greater numbers. Finally he used the money made by his offline business to start creating a product for the school segment and this resulted in the current learning app, which was launched in August 2015.

"Nobody is offering education in this format, breaking the syllabus into simple videos," says Arun Iyer, chief creative officer at Lowe Lintas, the ad company that created the campaign for the app.

To sir with love

Iyer decided to use Byju as a model in the television commercial to leverage his huge reputation as a teacher. The ad shows Byju explaining the Pythagoras theorem, because "the reason to believe comes from the video of Byju Sir teaching," says Iyer.

The popularity of "Byju Sir" is evident from the fact that many of his students today work for him and are part of his core management team. One such former student is Pravin Prakash, senior vice president sales and marketing at Byju's. Prakash recalls how frustrated he was when he couldn't clear the IIM entrance exam even after several attempts. It was then that he heard of Byju Sir's class and attended his weekend test-prep workshop. And the next thing he knew he had cleared the exam with a 99.9 percentile on his fifth attempt.

Even more surprisingly, he decided against going to the coveted institute but instead took up Byju's offer to help him build the business. "At the end of every class, Byju Sir would tell the students ,'there are 100 other opportunities if you don't get into the IIMs, and now there is one more, that is joining me,'" recounted Prakash, who has seen the company evolve from a one-man show to a learning app that is now preparing to go global.

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