At a time when India has put roadblocks for investors from China to put money into Indian companies, TikTok-owner ByteDance is reportedly in an early stage of discussions with Mumbai-based education technology firm Lido Learning for a potential investment opportunity.
Local media Economic Times (ET) said that ByteDance has had multiple rounds of discussions with Lido Learning, citing three sources who are privy to the matter.
The company was founded in April 2019 by Sahil Sheth who sold his previous edtech startup, Infinite Student, to Byju’s in 2015. Lido Learning provides live tutoring to students in K-10 segment and claims to have over 5,000 students who take classes through its website and mobile app.
After India changed its foreign direct investment norms in April, investments from countries that share a land border with India, including China, now are all subject to the Indian government’s approval before being materialized.
“As Mainland China companies now need to submit investment-related documents to Indian authorities and ensure all due diligence activities have been taken care of, it will take longer for Indian companies to receive the money even if the VC has in-principle agreed to invest,” a partner with an Indian law firm, who has worked with multiple China-based VC firms, told KrASIA on the condition of anonymity.
Food-tech major Zomato was one of the companies that got affected by the changes in India’s investment norms, as it couldn’t receive USD 100 million from Ant Financial which was a part of the USD 150 million funding round announced by the company in January this year. Currently, Zomato is in talks with Temasek to raise USD 100 million.
Considering that the investment from a Chinese company would take time to fructify, Lido Learning is also in talks with multiple other investors to raise USD 20 million, according to the ET report.
In April, just before the new FDI norms were passed, the company raised USD 7.5 million in its Series B round led by Alibaba-backed BAce Capital with participation from other investors including Madhur Deora, president of Paytm, media titan Ronnie Screwvala, among others. Lido Learning has raised a total of USD 10.5 million till now.
Last year, ByteDance’s short-video app TikTok launched an education program in India to offer short video clips covering a range of educational topics. It said it has partnered with local edtech companies such as Vedantu, Toppr, MadeEasy, and Gradeup to produce educational video content.
VC interest from global as well as local funds in India’s education tech space has been on a significant rise since the beginning of this year. In the first half of this year, edtech companies in the country saw a whopping 636% year-on-year increase in venture capital being poured in the space. According to a Venture Intelligence report, online education sector in H1 2020 raised USD 795 million compared to USD 108 million in the same period last year.
The investment spree has continued in the second half of the year as well with the recent fundraise by Vedantu that received USD 100 million in its Series D round led by US-based tech-focused hedge fund Coatue Management.