Allen Career Institute Acquires Edtech Firm Doubtnut in Landmark Move
- ByStartupStory | November 27, 2023
In a significant development within the Indian edtech landscape, Kota-based Allen Career Institute, renowned for its coaching programs, is set to acquire DoubtNut, a doubt-clearing edtech company. Three reliable sources familiar with the matter have confirmed the acquisition, marking Allen’s inaugural foray into the Indian edtech sector.
According to an anonymous source, the acquisition is structured as a stock and cash deal, seemingly characterized as a distress sale for Doubtnut. The company, backed by Peak XV, struggled to secure substantial funding post its Series B round.
Allen Career Institute bolstered its financial standing in May 2022 by raising an impressive $600 million from Bodhi Tree Systems, a joint venture between James Murdoch, founder and CEO of Lupa Systems, and Uday Shankar, former president of The Walt Disney Company Asia Pacific.
It is noteworthy that Lupa Systems had already invested in Indian edtech enterprises, including Doubtnut, and Harappa Education. Doubtnut, which had previously engaged in acquisition talks with edtech giant Byju’s, faced valuation disparities leading to an unsuccessful deal.
Sources indicate that the Allen-Doubtnut deal primarily comprises stock with a minor cash component. Doubtnut’s struggle to establish a viable business model and challenges in monetization prompted the company to explore consolidation opportunities over the past few quarters.
Doubtnut, having raised approximately $50 million in total funding, was reportedly in talks with other companies for potential acquisitions. However, the company’s co-founder, Tanushree Nagori, had denied such discussions in an interview with Entrackr in April of the current year.
DoubtNut reported spending Rs 194 crore during the fiscal year 2022 to earn Rs 10 crore. Internal documents reveal a revenue of Rs 26.6 crore in the last fiscal year (FY23). Noteworthy investors in DoubtNut include Peak XV Partners (formerly Sequoia), Omidyar, and Waterbridge.
On the other hand, Allen Career Institute is strategically enhancing its online presence through new websites and mobile apps under its digital arm, ALLEN Digital. In a move signaling its commitment to digital expansion, Allen appointed Abha Maheshwari, a former Meta executive, as the CEO of Allen Digital in May.
Founded by Rajesh Maheshwari in 1988, Allen Career Institute is a renowned test prep brand offering offline, digital, and distance courses for competitive exams such as IIT JEE, AIPMT, NEET-UG, KVPY, and the Olympiads. The institute reported a robust financial performance in FY23, with revenue from operations reaching Rs 2,277 crore and a profit after tax of Rs 429 crore. Queries directed to Tanushree Nagori, Allen Career Institute, and Peak XV Partners did not yield immediate comments.
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