Classplus acquires Matrix, Pivot Ventures’ stake in Testbook

• ByStartupStory     |    September 13, 2022

Classplus, a B2B ed-tech startup, has made its first investment by purchasing a minority stake in Testbook in a secondary sale. Classplus has acquired the shares of the Mumbai-based company’s present investors Matrix and Pivot Ventures in this transaction.

According to the company’s regulatory filing with the RoC, the Classplus board passed a special resolution to allot 1,695 Series E preference shares to Matrix Partners and Pivot Ventures at an issue price of Rs 4,00,013 per share, aggregating up to Rs 67.80 crore against 7,867 shares of Testbook held by them. Matrix Partners will possess 1.65% of Classplus as a result of this transaction. According to Fintrackr, Matrix held around 34% of Testbook before its most recent financing round.

“Classplus will evaluate to acquire more stakes in Testbook if the company demonstrates desired performance. It’s also likely to put some primary capital in Testbook in the coming months,” a source told Entrackr.

Testbook, which has been operating for eight years, helps students from suburban areas prepare for government exams through live classes, mock tests, and quizzes. Started in 2018 by Mukul Rustagi and Bhaswat Agarwal, Noida-based Classplus is a software platform that allows educators and content creators to build their online presence, digitize their offline tuition centers, and sell their courses online.

The report says Testbook is in need of primary capital since it has been unsuccessful in raising external funding. It’s one of the few VC-backed edtech businesses that hasn’t raised money in the previous two and a half years. It has so far secured over $13 million from Iron Pillar, Matrix, and a slew of angel investors. Testbook, which generates its money mostly by selling online courses and sample test papers for competitive examinations, has yet to disclose its FY22 financial results, according to Fintrackr, its income from operations increased by 85.8% to Rs 22.3 crore in FY21 from Rs 12 crore in FY20. Significantly, the company’s losses more than doubled to Rs 32.5 crore in FY21, up from Rs 15.3 crore in the previous fiscal year (FY20).

Classplus has, to date, raised $160 million in different waves and was valued at over $600 million in its most recent round. Alpha Wave, Tiger Global, Sequoia Capital’s Surge, Times Internet, Blume, and GSV Ventures are among its investors.

In June 2022, the firm announced a collaboration with former cricketer Sourav Ganguly and the launch of a new campaign named ‘#dadasupports.’ Educators and content creators were asked to participate in the initiative by making a video ad and submitting it to the Classplus platform. Sourav Ganguly, the President of the Board of Control for Cricket in India (BCCI), would then be included as the brand ambassador in the submitted advertisements.

It has been a low time for edtech companies. After the pandemic surge, the edtech industry appears to have lost its momentum in recent months. Aside from financial issues, the sector has seen major layoffs in recent months at organizations such as BYJU-owned WhiteHat Jr, Unacademy, Vedantu, and Lido Learning. Due to a funding shortage, Ronnie Screwvala-backed edtech firm Lido Learning filed for insolvency and bankruptcy with the Mumbai bench of the National Company Law Tribunal last week. 

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