Vedantu, an online learning company, is in advanced talks to raise $100 million, valuing it at a billion dollars post-money, according to sources. The company is firmly moving with a fundraise rather than a speculated purchase by Byju's.

Existing investors Coatue Management, GGV Capital, and Tiger Global Management will each contribute $60 million, while an Asian private equity fund would invest $40 million, according to these sources.

Vedantu never spoke with Byju's, according to sources close to the deal, putting an end to purchase rumours. CEO Vamsi Krishna also vehemently rejected the development in the report and subsequent interviews, claiming that his top focus was to grow Vedantu independently.

After Byju's, Unacademy, UpGrad, and Erudtius, Vedantu will become India's sixth online education unicorn. Unicorns are companies with a market capitalization of over a billion dollars that are privately held.

Vedantu, founded in 2011 by Krishna, Pulkit Jain, Anand Prakash, and Saurabh Saxena, now offers live coaching lessons for K12 students, including for engineering admission examinations such as IIT JEE Main and Advanced and NEET for medical colleges.

It includes sample question papers, revision notes, mock examinations, and previous year's papers, as well as classes for CBSE and ICSE, as well as numerous state boards. In May, Vedantu announced that its website had 27 million monthly visitors and 68 million monthly YouTube views.

Although many of these consumers receive Vedantu's services for free, the magnitude demonstrates the company's growing popularity. It now has 200,000 paid subscribers, up fourfold in the last year, thanks to pupils learning electronically while traditional education centres were closed due to the pandemic.

Vedantu reported its revenue increased fourfold year over year in May 2021, with an annual revenue run rate of $60 million or a monthly revenue of $5 million (Rs 35 crore). To put this in perspective, Aakash, one of India's oldest and largest offline coaching centres, made almost Rs 100 crore in monthly income in FY20.

In July 2020, it raised $100 million from Coatue Management, valuing company at $600 million. Vedantu has had a difficult time getting funds since then, especially when compared to peers Byju's and Unacademy, whose values have risen in the last 18 months.

Unacademy's market capitalization has risen from $500 million in February 2020 to $3.4 billion today, while Byju's has risen from $5 billion to $16.5 billion in the same time period.

“Investors want to pick a company that’s well capitalised and is a market leader. Vedantu faces direct competition from Byju’s and broader competition from Unacademy. But closing this round should let them see another day, given that their cost structure has also become more efficient,” said one person tracking the company.

Vedantu had previously said that it was profitable from a contribution margin standpoint. This means that its sales cover all of its variable costs, indicating that company is on its way to profitability.