Edtech Startup Brightchamps Reports Loss Despite Heavy Advertising Spend, Acquires Schola for $15 Million to Expand in Southeast Asia
- ByStartupStory | April 6, 2023
In the fiscal year 2021-2022, Brightchamps, a startup that focuses on K-12 education, incurred advertising costs that were nearly double the revenue earned. This is another example of an edtech startup investing heavily in marketing to increase its brand recognition.
In its initial year of full operation, the company reported a net loss of Rs 98.6 crore despite raising about $63 million in November 2021 in a funding round led by Premji Invest. The company was valued at around $650 million during that funding round.
Another example of an edtech startup investing heavily in advertising to build brand awareness is Brightchamps. In FY22 (2021-22), the startup spent almost Rs 2 on advertising for each Rs 1 earned. Brightchamps is focused on K-12 education (kindergarten to class 12).
According to its filings with the Ministry of Corporate Affairs (MCA), Brightchamps, an edtech startup on the verge of becoming a unicorn and supported by investors including Binny Bansal (founder of Flipkart), GSV Ventures, Premji Invest, and Beenext, spent Rs 42.4 crore on advertising and marketing in FY22. The company’s operating revenue for the same period was Rs 22.5 crore. These figures were obtained through Tofler.
Like Teachmint, Brightchamps also has a high trailing twelve-month (TTM) revenue multiple, despite having a higher valuation. Teachmint, on the other hand, generated only Rs 80 lakh in operating revenue. The high revenue multiples reflect the funding frenzy of 2021 when edtech companies in India raised around $5.4 billion across 350 deals, as per data available on Tracxn.
Brightchamps was established in 2020 by Ravi Bhushan and operates in more than 30 countries, including the US, Canada, the UAE, Saudi Arabia, Indonesia, Malaysia, Thailand, and Nigeria. The platform offered by Brightchamps is designed to teach coding, financial literacy, and robotics to children between the ages of 6-16.
Brightchamps had announced in 2022 that it plans to allocate $100 million for mergers and acquisitions in FY23 (2022-23). However, the company has raised just over $63 million until now. In a conversation with Moneycontrol last year, Bhushan had stated that the company has a very low cash burn rate and intends to finance acquisitions using the funds it has raised as well as Brightchamps’ stocks.
In August 2022, Brightchamps acquired Schola, a communication and English-learning platform based in Singapore, for $15 million in a cash and stock deal. The acquisition involved retaining all of Schola’s employees, including its founding team, under Brightchamps. Bhushan explained to Moneycontrol that the acquisition of Schola would enable Brightchamps to incorporate an English-speaking and communications vertical, which would aid it in expanding more rapidly in its key markets, such as Vietnam, Thailand, and Indonesia.
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