Classplus buys out Matrix and Pivot Ventures’ stake in Testbook

1
Classplus buys out Matrix and Pivot Ventures
stake in Testbook
B2B edtech company Classplus has forayed into the
consumer segment by acquiring a minority stake in
Testbook via a secondary transaction. This is a
maiden investment by the Noida-based firm into
the exam preparation startup. With this
investment, Classplus has bought out shares of
current investors Matrix and Pivot Ventures. The
board at Classplus has 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, according to the
companys regulatory filing with the
RoC. Following this transaction, Matrix Partners
will own a 1.65 stake in Classplus. According to
Fintrackrs estimates, Matrix owned about 34
stake in Testbook until its last financing
round. Eight-year-old Testbook helps students
from smaller cities prepare for government exams
through live classes, mock tests and quizzes
while Classplus is a software
2
platform that allows educators and content
creators to build their online presence, digitise
their offline tuition centers and sell their
courses online. According to Entrackr sources,
the investment is strategic in nature and
Classplus may fold-up Testbook completely into
the company in the future. Classplus will
evaluate to acquire more stakes in Testbook if
the company demonstrates desired performance.
Its also likely to put some primary capital in
Testbook in the coming months, said one of the
sources requesting anonymity as this person isnt
authorized to speak to the media. Its worth
noting that Testbook requires primary capital to
grow further as it has been finding it tough to
raise external capital. Its one of the rare
VC-backed edtech startups which didnt raise
capital in the last two-and-a-half years. So far,
it has raised around 13 million from Iron
Pillar, Matrix and a clutch of angel
investors. Queries sent to Classplus and
Testbook didnt elicit any immediate response. We
will update the story as and when they
respond. Testbook primarily makes money from
selling online courses and mock test papers for
competitive exams. While the company is yet to
file FY22 financial numbers, its revenue from
operations surged 85.8 to Rs 22.3 crore in FY21
from Rs 12 crore in FY20, as per Fintrackrs
analysis. Significantly, the companys losses
soared 2X to Rs 32.5 crore in FY21 from Rs 15.3
crore in the preceding fiscal year (FY20). As of
now, Classplus has raised 160 million across
several rounds and was valued at around 600
million in its last round. Its investors include
Alpha Wave, Tiger Global, Sequoia Capitals
Surge, Times Internet, Blume and GSV
Ventures. Given the ongoing layoffs and
shutdowns, especially in the edtech space, the
startup ecosystem may see more such deals in the
coming months. As per media reports, almost all
edtech startups have fired a significant number
of employees in the past few months. The list
includes Byjus, WhiteHat Jr, Toppr, Unacademy,
Vedantu, LEAD, and Eruditus, while Ronnie
Screwvala-backed Lido and Alpha Wave-backed Udayy
shut down their operations due to lack of funds.