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Edtech startup Classplus is looking to acquire government test preparation startup Testbook and is swapping shares with Testbook’s investors for the same.

Alpha Wave-backed Classplus’ board has approved allotting its 1,695 Series E compulsory convertible cumulative preference shares (CCPS) worth $8.5 Mn (INR 67.8 Cr) to Testbook’s existing investors – Matrix Partners and Pivot Ventures, according to regulatory filings.

The board of Mumbai-based Classplus, which enables educators and content creators launch online learning courses, approved allotting 67 Series E CCPS to Pivot Ventures in exchange for 319 Series B CCPS of Testbook held by the investment firm. It also approved allotting Classplus’ 1,628 Series E CCPS to Matrix Partners for 100 equity shares and 7,448 Series A CCPS of Testbook held by the private equity firm.

The filings clarified  that the shares are not being allotted for raising any fresh funding but for acquisition of Testbook. Post allotment of shares, Pivot Ventures will hold 0.07% stake in Classplus, while Matrix Partners will hold 1.65% stake in the edtech startup. 

In July, publishing and education services company S Chand sold its entire stake in Testbook for INR 17.9 Cr. The company said that it exited Testbook with a 7.8X return on its investment of INR 2.3 Cr. While S Chand didn’t disclose the name of the buyer, as per media reports, a domestic edtech startup bought the stake.

With time, it is expected that more and more investors of Testbook will sell their stake to Classplus. 

Testbook was founded by IIT Bombay alumni Ashutosh Kumar, Narendra Agrawal, Manoj Munna, Praveen Agrawal and Arpit Oswal in early 2014 to help students crack government competitive exams. 

The startup has raised close to $13 Mn in three rounds of funding till date. It raised $4 Mn in Series A round led by Matrix Partners in 2017. In 2020, it raised $8.3 Mn in a round led by Iron Pillar. 

On the other hand, Classplus is a B2B edtech startup which helps educators and content creators with online coaching business. The startup allows teachers to run their coaching on its platform. It offers student engagement programs and also allows them to make payments. The startup claims to have digitised over 1 Lakh educators across 3,000 cities serving 25 Mn students. 

Classplus has raised over $160 Mn across multiple funding rounds till date. It counts Tiger Global, Alpha Wave Incubation, Sequoia Capital, Times Internet, Chimera Ventures among its investors. Earlier this year, it raised $70 Mn in its Series D round led by Alpha Wave Incubation.