Online certification course provider Simplilearn Solutions Pvt. Ltd is banking more on its enterprise business rather than consumer servicing as it believes reskilling is the need of the hour. Sensing a huge opportunity in organic growth, the ed-tech firm has also deferred its acquisition and larger fundraise plans, says CEO Krishna Kumar in an interaction with VCCircle. Kumar, who will be in Gurgaon this week to take part in the News Corp VCCircle Education Investment Summit, also talks about the outlook for the ed-tech sector and his financial targets. Excerpts:
Simplilearn has a presence in India and the US. What is your expansion plan for these two regions? Are you looking to expand your global footprint?
We already have an office in San Francisco in the US. We recently opened another office in Raleigh (North Carolina) where we take care of our customer service courses. We are adding a lot of team members there. We are adding new categories in India, too. Earlier, we were servicing only consumers but now we are doing a lot of enterprise businesses in India.
For the time being, we have decided to focus on India and the US; so no other overseas expansion plan is on the cards. These are two big markets and we want to primarily be a sizeable player in these two countries before moving on to any other market. We have business from other markets also but we do not want a physical presence in any other country at this point in time.
How are you planning to diversify your offerings?
Our main focus is to grow bigger into categories. We are striving to position ourselves as a company which offers digital training; so we want to get deeper into fresh categories—for example, big data, data science as well as machine learning and artificial intelligence. We have been into cloud and have segregated it into two categories—cloud computing and EVOK. We have become a company which helps digital transformation training.
Since 2015, the company has built an enterprise business wherein it offers courses to employees of big corporations. How is that category panning out?
We derive around 40% of our business from enterprise training. Most consumers who buy our courses work with enterprises. So these are somehow interlinked. Enterprise itself is a big category as you do transactional work for enterprises and become their partner.
We are actually working with 70 customers in India and around 100 customers in the US actively. On a cumulative basis, we have served around 1,000 enterprise customers.
Simplilearn acquired Silicon Valley-based Market Motive in 2015. Are you seeking more inorganic growth opportunities?
We are not actively looking at acquisitions right now as organic growth itself is pretty high. We really don’t want to get distracted till we get more juice out of what is already available in our hands. Keeping that in mind, we have parked that idea ((inorganic growth) for the time being. But if we need to do an acquisition, we might buy a company which is into the enterprise business because that will let us grow faster into that category.
Simplilearn has raised around $30 million in funding so far from investors such as Mayfield and Kalaari Capital. It was looking to raise a similar amount in a Series D round. What is the status?
There is a huge market for skill development. A lot of companies are engaging in upgrading themselves rather than raising funding. They are spending so much money to establish themselves first. I don’t think (ed-tech firms) will look for more capital in the immediate future. We have enough money to take us into the future. We will be focusing on growth and profitability for the next one year.
The company’s losses widened to Rs 45 crore in 2016-17 from Rs 29 crore in 2015-16. When do you expect to break even?
We are hoping to be profitable on a yearly basis by the end of March 2018. It will be more than a break-even.
What is the outlook for the ed-tech sector in next two to three years?
Considering the consumer business, there will be only one or two winners as people will come back to brands. But on the enterprise side, multiple companies will do very well because needs are different there. In the consumer category, only a few companies will survive but a lot of companies will move on to the enterprise side and fare better in terms of income. Re-skilling employees is the need of the hour; so enterprise as a category will have multiple winners.
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