Exclusive: Allen set to acquire edtech startup DoubtNut

Kota-fame Allen Career Institute is acquiring doubt clearing edtech company DoubtNut, according to three sources aware of the development. This will be the first acquisition for the coaching institute in the Indian edtech space.

“Allen is acquiring Doubtnut in a stock and cash deal and it seems to be a distress sale as the Peak XV-backed company has failed to score a significant follow on funding after Series B round,” said one of the sources requesting anonymity.

In May 2022, Allen raised $600 million from Bodhi Tree Systems which is a joint venture between Lupa Systems founder and CEO James Murdoch and Uday Shankar, the former president of The Walt Disney Company Asia Pacific.

It’s worth highlighting that Lupa Systems has already invested in Indian edtech companies including Doubtnut and Harappa Education. The investment firm also invested in DailyHunt’s parent VerSe Innovation.

Doubtnut has raised about $50 million in total funding and held acquisitions talks with edtech giant Byju’s in the past. However, the deal did not go through due to differences over valuation.

As per sources, the deal would largely consist of stock with a small cash component.

“It failed to figure out a business model and lack of monetisation also forced the company to explore consolidation opportunities for the past several quarters,” said another source. The firm’s last equity round came in February 2021 and it managed to raise $2.5 million via convertible notes from existing backers in April this year.

As per Entrackr’s sources, DoubtNut was also in talks with a couple of more companies for acquisitions. However, the company’s co-founder Tanushree Nagori denied this during an interview with Entrackr in April this year.

Queries sent to Nagori, Allen, and Peak XV didn’t fetch any immediate comments.

Doubtnut spent Rs 194 crore during FY22 to earn Rs 10 crore. According to the company’s internal documents reviewed by Entrackr, it posted a revenue of Rs 26.6 crore in the last fiscal year (FY23). DoubtNut’s existing investors include Peak XV Partners (formerly Sequoia), Omidyar and Waterbridge.

Allen, on the other side, is ramping up its online presence with new websites and mobile apps, catering to various undergraduate and postgraduate courses under its digital arm ALLEN Digital. In May, the firm also appointed Meta executive Abha Maheshwari as the CEO of Allen Digital.

Founded by Rajesh Maheshwari in 1988, Allen is a test prep brand that provides offline, digital and distance courses for IIT JEE, AIPMT, NEET-UG, KVPY, and the Olympiads. The firm reported Rs 2,277 crore in revenue from operations in FY23 with a profit after tax of Rs 429 crore.