Dec. 16, 2020

Sajith Pai


Sajith Pai

Director, Blume Ventures

“We are a seed fund. We have a USD100-million fund size and are able to invest in around 25-27 companies.”


Sajith Pai is a long-time media executive turned VC. At Blume, he supports investments in media, edtech, and e-commerce, while simultaneously helping Blume build a research and knowledge platform. Before Blume, he worked at The Times of India Group, across roles in strategy, business development, and marketing. Pai has an MBA from IIM Ahmedabad and a BA in economics from Chowgule College, Goa.

How does India's current start-up ecosystem, especially with regards to edtech companies, compare to 2010, when Blume Ventures started?

In 2010, edtech was practically nonexistent, and no one was really learning online. There was some investment in distribution with a few e-commerce brands. There were also a few edtech companies in terms of providing curriculum and materials; however, there was no one actually offering the kind of edtech we have today, which goes directly to students. In 2010, India did not have high smartphone penetration or cheap bandwidth. In 2010, there were probably 30-40 million people in India using smartphones compared to around 400 million people today. 2016 was a pivotal year, and the story of edtech in India cannot be separated from the story of Jio. Jio made bandwidth really cheap, to the extent that India is likely the biggest consumer of mobile bandwidth today. In 2016, that cheap bandwidth led to the penetration of smartphones. That year, another development happened—unified payments interface (UPI) technology. The Chinese edtech ecosystem took off when three things happened—a smartphone in every pocket, cheaper high-speed internet, and UPI. In India, all three of these factors have come together now. Since 2016, the brands that have taken advantage of this are mobile first, and Unacademy is a great example of this. It started as a YouTube channel and then started putting all its content online through a mobile app. Unacademy started in 2015, and Jio in 2016, and they just took off like a rocket after that. Other young innovative companies like Classplus, one of our portfolio companies, also grew, taking advantage of mobile internet and cheaper bandwidth. There was no edtech sector in 2010, now edtech is the fastest-growing sector in India.

What challenges are India's edtech start-ups facing to attract international investment?

The exciting story for India now is in what we call “India 2,” which is a population segment of about 100 million people that have incomes of a tenth of the top 100 million people that make up “India 1.” These India 2 consumers are rapidly starting to use the internet. These new 100 million consumers are very value conscious; these are the ones Jio has brought into the digital world, and for many of them Facebook, YouTube, and WhatsApp make up the internet. The excitement for international investors is that just as India 1 has been using and consuming edtech products in India, so will the next 100 million. The challenge is that India is not yet a large market. It is an exciting and vibrant market, but not yet a large and deep market—it will take time. However, beyond the market itself, international investors are also excited to come here because there are many companies from India that are doing extremely well globally. For example, 60% of WhiteHat Jr's revenue comes from the US; likewise for Cuemath. Quizzizz was launched in Bengaluru, but is a big hit in the US. There are many such examples of edtech companies starting in India that are doing well abroad. India has a large English-speaking population, with 25-30 million fluent in English and 100 million who are proficient. Therefore, with some modifications, products launched here can be used in the US as well.

How does raising funds from international investors play into Blume Ventures' medium-term strategy?

Blume Ventures invested in Unacademy in the seed round when it was just starting out. Later, Sequoia Capital and Nexus came in followed by international companies such as Steadview, General Atlantic, and SoftBank. Similarly, with Classplus, another of our breakout hits, RTP Global invested first, followed by a UK-based fund called Alpha Wave Incubation (AWI), a fund of Falcon Edge. There is a great deal of excitement. I must give full credit to BYJU's for being the really big pioneers in the expanding reach of edtech in India. Many international investors have been exposed to BYJU's. The Chan Zuckerberg Foundation, Owl Ventures, Silver Lake, and others have all seen BYJU's, and there is a possibility that more companies will be in invested in today. Every week, I have at least two calls with US investors who all want to find out more about India and explore its potential.

What role do you see edtech playing in your future investment portfolio, and how did COVID-19 alter your strategy, if at all?

There is an interesting quote by Gaurav Munjal, the founder of Unacademy: “What e-commerce was to China, edtech is to India.” The Amazon of India will not be an e-commerce company but an edtech company. Chinese e-commerce or food delivery companies are 20 times bigger than the equivalent companies in India; however, India is producing comparable edtech companies. BYJU's is the 2nd highest valued edtech start-up today, just below the Chinese company Zuoyebang. Indians are willing to spend money on education, and we have always believed in that. We are a seed fund. We have a USD100-million fund size and are able to invest in around 25-27 companies. We can only do about four or five education investments, as there are many other attractive opportunities as well. Edtech has been a huge winner of the pandemic, and we accelerated a few conversations thanks to the pandemic. We did five when we might have only done four edtech investments.

Blume Ventures has had over 20 exits thus far across start-up sectors. What is your outlook on the exit environment for edtech?

We love exits. At the moment, exits are scarce in India because not too many IPOs have taken place. However, they are beginning to take place. There are at least 10 companies interested in going for IPOs in 2021. We will begin to see the first few Indian IPOs soon. The M&A market in India is not as developed as in Europe or North America, and the price one gets when they do an M&A here is not as high. WhiteHat Jr was a glorious exception to that, as it got a great price from BYJU's. However, those instances have been few and far between. An IPO is still the best way for an exit, though we have not had many examples of IPOs. There have only been half a dozen IPOs in this space over the last 10 years.

What are your short-term priorities or goals for Blume Ventures?

Our focus now is on consolidating and helping investor companies and founders focus on growing. There are many exciting conversations currently underway in the US. Therefore, the idea is to give our start-ups the funds quickly to help them ramp up and make sure we begin our partnerships with US investors in January and February 2021. That is the plan going forward. Blume Ventures' role is to be a gateway for these international investors interested in the edtech sector in India.