BSE listed Educomp Solutions Ltd, an education service provider, is planning to acquire online education startup StudyPlaces for a maximum consideration of $1.5 million dollars, as a preferential share allotment. Readers might remember that StudyPlaces had raised $3 Million in funding from Kleiner Perkins, Caulfield & Byers (KPCB), Sherpalo Ventures and Info Edge in January 2008, with each entity investing $1 million in the company, so it appears that the investors will lose money in the deal.
StudyPlaces is an online education startup with operations both in India and the US, providing students with educational information and counselling for admissions. It was founded by Amitabh Nagpal, who was previously in the telecom services business as a co-founder of Cymbal Corporation, sold to Patni Computers for $68 million.
This deal has been a long time in the making. MediaNama had first learnt of StudyPlaces being on the block around four months months ago, and at that time, three entities were in talks for acquisition of StudyPlaces: Educomp, Info Edge (India) (which also owned around 13% in StudyPlaces) and Firefly E-Ventures (HT Media). According to sources who were privy to negotiations, the amount being discussed for the deal was in the $1 million range at the time, and the deal was swung Educomp’s way because the StudyPlaces team wanted to go with them. A part of sales for StudyPlaces had been taken up by FireFly E-Ventures, a subsidiary of HT Media, and it was generating decent revenue, hence their interest in acquiring the company. It’s strange that Info Edge was also considering acquisition, since they already have Shiksha.com.