Lead acquires Pearson’s K-12 biz; KreditBee raises $120 million in new financing tranche

Also in this letter:
■ ETtech layoffs tracker: job cuts continue in 2023
■ OpenAI in talks to raise at $29 billion valuation
■ ETtech Deals Digest

Lead to acquire Pearson’s India K-12 business

Lead cofounders Sumeet Mehta (left) and Smita Deorah

Edtech unicorn Lead said on Friday it has entered into a definitive agreement with British educational services company Pearson to acquire its K-12 India business. The deal is part of Pearson’s strategy, as per which it has been divesting its K-12 businesses in other geographies as well.

Quote unquote: “The acquisition will help the company expand its network to 9,000 schools from around 3,500 currently,” cofounder & CEO of Lead, Sumeet Mehta, told us. He further said the acquisition would see around 150 people join Lead from Pearson.

Previous funding round: The Mumbai-based edtech company had raised $100 million in January last year in a Series E round that turned it into a unicorn. Lead’s cofounder and co-chief executive officer Smita Deorah won the Woman Ahead category at the ET Startup Awards.

In an interview with ETtech, Deorah had earlier said edtech platforms in the business-to-consumer space will have to adapt to ‘discretionary spends’ by parents and offer solutions different from schools.

Meanwhile, the pandemic-driven boom has ended and tech funding has dried up, forcing edtech ventures to cut costs further and seek sustainable offline models with profit-generating revenue streams.

Read our deep dive | As the pandemic bubble bursts, edtechs back in class

KreditBee raises $120 million in new tranche

Credit-based fintech startup KreditBee on Friday announced that it has raised $120 million in fresh capital as part of its latest tranche of funding round, taking the total round size to $200 million. ET had first reported in September that Advent International was looking to pick up stake in the fintech startup.

Details: US-based private equity giant Advent International has invested $100 million in this tranche while others have put in the remaining amount. This is one of the largest funding rounds for an Indian startup in the last few months amid the ongoing funding crunch.

Post this round, KreditBee will be valued at around $680 million.

KreditBee said it will use the new capital to scale existing business and diversify its product offering by venturing into digitally enabled financial products. It is planning to enter the SME lending space this year.

Quick recap: The latest round comes just over a month after the startup raised $80 million from existing investors – Premji Invest, Motilal Oswal Alternates, TPG-backed NewQuest Capital Partners, and Mirae Asset Ventures.

ETtech layoffs tracker: Job cuts continue in 2023

We are barely a week into 2023 and layoffs are in the news again. According to Layoffs Tracker– an online publication tracking layoffs in the tech and non-tech sector, around 2,72,052 employees have been laid off by companies globally so far since January 2022 and it looks like the trend will continue this year.

In a note to employees, Amazon CEO Andy Jassy said the ecommerce giant is set to cut 18,000 jobs. The figure has risen from last year when the company said the job cuts would impact 10,000 people. Besides Amazon, Salesforce, Vimeo, among other companies have also announced job cuts.

Reason for layoffs: Big tech firms such as Meta, Twitter, Amazon, Alphabet, and Microsoft have cited “global uncertainty, dwindling ad revenue, rising inflation and over hiring during the pandemic” for the layoffs.

What the numbers say: Within the first week of 2023, layoffs have impacted 28,585 workers which is 64.5% more than the 17,074 job cuts announced in December, according to Layoffs Tracker.

Interestingly, 71,416 employees were sacked by 204 companies in November 2022 – marking the highest number of layoffs in a single month since last January.

ETtech Deals Digest: Indian startups enter 2023 as funding winter still looms

Indian startups reeled under funding winter for most part of 2022 as global inflation, macroeconomic headwinds and interest rate hikes around the world kept investors away from taking risks with new businesses.

Also read | Seed funding outshines overall deal growth in 2022

What the numbers say: The number of seed stage deals in India, according to data from London-based investment data platform Preqin, fell to 396 in 2022 from 500 in 2021. According to the same data, the amount of money pumped in by investors at the seed stage, rose by 86% to almost $1.5 billion in 2022 from $805 million in 2021.

Also Read: Neobank Jupiter picks up Rs 100 crore in venture debt

Here is a list of startups that got funded this week.

OpenAI in talks to raise funds valuing it at $29 billion

OpenAI, the artificial intelligence research lab behind chatbot ChatGPT, is in talks to sell existing shares in a tender offer that would value the company at about $29 billion.

The deal is structured in a way in which venture capital firms Thrive Capital and Founders Fund will buy shares from existing shareholders such as employees.

Deal details: The deal would attract investment of at least $300 million in share sales.

What is ChatGPT? OpenAI’s chatbot is a software application designed to mimic human-like conversation based on user prompts and can respond to a large range of questions while imitating human speaking styles.

Microsoft CEO Satya Nadella recently said ChatGPT will also be integrated with its several products including search engine Bing.

Today’s ETtech Top 5 newsletter was curated by Erick Massey in Delhi and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.