Allen Career Institute Acquires Doubtnut in Major Edtech Deal
In a notable development in India's edtech sector, the Kota-based Allen Career Institute, well-known for its coaching programs, is poised to acquire DoubtNut, an edtech company specializing in doubt-clearing services. Three credible sources acquainted with the situation have verified the acquisition, representing Allen's debut in the Indian edtech arena. As per an undisclosed source, the acquisition is arranged as a combination of stock and cash, appearing to be a distress sale for Doubtnut. Following its Series B funding round, Doubtnut, supported by Peak XV, encountered challenges in securing substantial additional funding.
Allen Career Institute significantly bolstered its financial position in May 2022 by securing an impressive $600 million investment from Bodhi Tree Systems, a collaboration between James Murdoch, founder and CEO of Lupa Systems, and Uday Shankar, former president of The Walt Disney Company Asia Pacific. It's notable that Lupa Systems had previously invested in Indian edtech ventures like Doubtnut and Harappa Education. Doubtnut had previously engaged in acquisition discussions with Byju’s, a leading edtech firm, but differences in valuation resulted in an unsuccessful deal.
Reports indicate that the Allen-Doubtnut deal is primarily stock-based with a minor cash component. Doubtnut faced challenges in establishing a viable business model and monetization, leading the company to explore consolidation opportunities in recent quarters. Despite having raised around $50 million in total funding, Doubtnut reportedly explored discussions with other companies for potential acquisitions, although co-founder Tanushree Nagori denied such talks in an interview with Entrackr in April of this year.
During the fiscal year 2022, DoubtNut incurred expenses of Rs 194 crore to generate revenue of Rs 10 crore. Internal documents reveal a revenue of Rs 26.6 crore in the last fiscal year (FY23). Notable investors in DoubtNut include Peak XV Partners (previously Sequoia), Omidyar, and Waterbridge. Meanwhile, Allen Career Institute is strategically bolstering its online presence through new websites and mobile apps under its digital division, ALLEN Digital. Demonstrating a commitment to digital expansion, Allen appointed Abha Maheshwari, a former executive from Meta, as the CEO of Allen Digital in May.
