Classplus Flips Its Edtech Playbook: Test Prep Vertical Outshines Early SaaS Bet

Teacherpreneur, solopreneur, videopreneur – the myriad derivatives of an entrepreneur started emerging when the edtech story boomed in India and cornered the biggest chunk of funding at $4.73 Bn in 2021. Classplus wrote its first script when this landscape boomed during the pandemic.

While unicorns like BYJU’S and Unacademy raised billions taking tutoring online when the schools went shut during the pandemic, Classplus went off the beaten track to equip teachers with digital skills, online courses, student communication channels, and hosting their courses online. 

The startup pioneered the B2B segment in the edtech space, weaving it around a software-as-a-service (SaaS) model to help teachers – creators, in this case – monetise their skills by creating online courses, helping in content management and distribution to students, who were the users. 

The monetisation hook was simple – charge the teachers under a subscription plan ranging from INR 13,000 to INR 50,000 depending on the services and access to its tech stack. It additionally charged a commission of 15% of the course fees on the packages sold. The company tied up with coaching institutes across tier II and III cities, extending the SaaS model. 

Classplus pitched itself as Shopify of edtech, helping traditional tutors go digital and providing end-to-end solutions from tracking attendances, conducting classes and test assessments. 

The model clicked with investors too. The startup raised $159 Mn between 2020 and 2022, with its last funding round of $70 Mn in Series D in March 2022, led by Alpha Wave Global and Tiger Global, valuing it at INR 5,000 Cr ($600 Mn). The investors stayed on even when Classplus filed a revenue of merely INR 26 Cr in FY22 and its losses spiralled to INR 164 Cr.

Classplus had another close rival in Lightspeed-backed Teachmint that raised nearly $118 Mn on the back of its SaaS model, mostly helping tutors conduct live classes online.

While Teachmint pivoted from SaaS edtech to selling school supplies-related hardware, including setting up smart classrooms for schools, Classplus went on an acquisition spree with some of them turning sour. 

Classplus makes an interesting case study of yet another B2B edtech player finding a saviour in B2C model .

What adds a twist to the tale is a small B2C player it had picked up. Testbook’s revenue for FY24 was nearly double that of Classplus that helped jack up the consolidated revenue of its new-found parent. 

Piqued by the evolving business dynamics at Classplus, we looked deeper.  

Why The Core Edtech SaaS Crashed

Covid-19 resulted in the surge in apps built around digital mode of tutoring, especially in K-12 and test prep segments, when over 320 Mn students and teachers in Indian schools and higher education institutes were locked at home. 

The founder of a SaaS edtech startup in Mumbai said the model aimed to make an app that would provide all the backend tools to digitise their coaching businesses – uploading videos, selling notes, collecting payments, and communicating with students.

“But as offline coaching reopened after the pandemic’s peak, tutors found less reason to pay for the SaaS tools. Many reverted to free options like WhatsApp and YouTube, or simply resumed classes offline,” he added. 

The argument justifies why the value proposition of Classplus worked well in 2020 when the teacher engagements were high, customer acquisition costs were low, and sales had zoomed. 

The company’s revenue base remained low as against its $600 Mn valuation. In FY24, the platform’s revenue from operations stood at INR 73.9 Cr as against INR 47.8 Cr a year back, showed Inc42 Datalabs records. It reduced the total expenses to INR 165.5 Cr from INR 211.6 Cr, where employee benefit costs were highest. 

“I think a realisation is dawning that the revenue growth, user engagement and sustainable profitability are difficult metrics to achieve by only selling softwares. Hence, there needs to be different integration of verticals like a hardware-software mix to be in the industry for the long term,” the Mumbai edtech founder said.

In the days after the pandemic, as normalcy returned, the rapid growth in the edtech sector seems to have plateaued. Rival Teachmint has, in fact, pivoted to selling integrated smart classroom products while working with educational institutes. Its operating revenue reached INR 17 Cr in FY24 from INR 8.1 Cr a year back, but it could cut down its losses only to INR 110 Cr from INR 180 Cr.

Classplus CEO and cofounder Mukul Rustagi, however, denied that his startup was on a rough patch. “We do see a demand from the teachers who want to build their own websites, apps and maintain a digital presence, which is why our revenue base has more than doubled even when the overall sentiment has been gloomy. The fact that we are still growing proves that our core business is strong,” he told Inc42.

As we tried to read between the lines, an unseemly source of funds emerged from the maze of acquisitions Classplus built over the years. 

How Testbook’s Revenue Clicked

The B2C platform caters to aspirants looking for government jobs and young professionals. Through a pureplay B2C edtech model, it helps them with mock tests, solved exam questions, upskilling, doubt-clearing sessions, and live interactive classes. 

Classplus acquired a controlling stake in Testbook in September 2022. It was a secondary transaction, valued at INR 67.8 Cr, involving purchase of shares from Testbook’s existing investors like Matrix Partners and Pivot Ventures.

The deal seemed like a B2B player’s foray into the B2C space. Although Testbook runs under a different legal entity, Testbook Edu Solutions Private Ltd, it has Classplus cofounders Mukul Rustagi and Bhaswat Agarwal on its board of directors. 

The test prep platform was founded in early 2014 by IIT Bombay alumni Ashutosh Kumar, Narendra Agrawal, Manoj Munna, Praveen Agrawal and Arpit Oswal and had raised $13 Mn until Classplus picked it up.

Classplus CEO said the company has integrated some of its products into Testbook. Supercoaching, for instance, where top teachers share content on the Classplus platform have started contributing to Testbook as well.

Testbook’s acquisition was on the premise that examinations for government jobs was a huge underpenetrated market, especially in tier II towns and beyond. “There are more than 5,000 government job exams held every year at different levels across the country and this is a huge market opportunity,” Rustagi added.

Testbook runs on a free as well as subscription-based model with 5 Cr students visiting the app annually. Compared to Classplus, which raised more than $200 Mn, Testbook’s fund-raise has been very small, nearly $14 Mn. But on the revenue front, Testbook outpaced its parent with a topline of INR 137 Cr in FY24, as against INR 73.9 Cr for Classplus. Testbook, however, grossed a loss of INR 84.9 Cr, which was four-times INR 22.7 Cr for Classplus.

Classplus has been accounting Testbook’s revenues in its consolidated financial statements since FY23. Its consolidated revenue from operations increased significantly from INR 25.9 Cr in FY22 to INR 102 Cr in FY23 to INR 213 Cr in FY24, according to Inc42 Datalabs records.

Textbook made up nearly 64% of this overall revenue, whereas the core SaaS business contributed merely 34.6% to the pie.

“Testbook has basically overtaken the Classplus brand, although it was acquired at a fraction of the investments made in Classplus. It is an unusual scenario. Even in BYJU’S and Unacademy, which were acquisition-heavy companies, a major revenue portion came from the core businesses and not from acquired businesses. For Classplus, it is the other way round, with a very small company in scale driving its overall revenues,” said the partner at a VC firm which had backed BYJU’S.

Testbook turned out to be a dark horse for Classplus, but some other acquisitions went rogue. 

Why Some M&A Deals Went Awry

Classplus slipped into two legal disputes in 2023-24 over the acquisition of B2C edtech companies Abhinay Maths and Saarthi. The founders of the startups sued Classplus for allegedly violating contracts, forcing founders to exit and denying capital to the investors. 

In August 2023, Saarthi cofounder Chiraag Kapil and its investors accused Classplus of cheating and criminal breach of trust. As per a lawsuit, Classplus had acquired Saarthi in 2022 but the investors associated with the target firm did not receive their stipulated agreements or the corresponding equity in Classplus they were entitled to even after the deal. 

The petition also claimed that Kapil was onboarded as a key executive personnel during the acquisition process in November 2021 but was “unexpectedly” terminated in August 2022.

Classplus, however, denied any wrongdoings and said that Chiraag and the other cofounder had received cash payouts and exited voluntarily.

The deal with Abhinay Maths came under fire in March 2024 when founder Abhinay Sharma filed an FIR against the Classplus founders for alleged cheating, forgery and copyright infringement. The key allegations included unauthorised acquisition of assets worth INR 70-80 Lakh, use of counterfeit stamps of AMCP Edutech, the parent entity of Abhinay Maths, and creation of forged documents to facilitate these illicit transfers.

The Classplus founders declined to comment on the Abhinay Maths acquisition details.

The B2B edtech startup, however, refused to keep M&A out of syllabus for the time being and, instead, continued to build on its M&A portfolio.

Why Classplus Diversified From Coaching To College To Credit 

After its SaaS business model lost its sway and some acquisitions turned rogue, Classplus opted for revenue diversification, foraying into various B2C verticals through acquisitions and organic growth and pure financial investments. 

Polaris School Of Engineering (Higher Education): From an edtech software enabler to an offline college – Classplus is now banking on a B2C offline model, toeing the line of Unacademy and Physics Wallah. In 2024, Classplus opened its first school in Bengaluru, Polaris School of Technology (PST), to offer BTech courses offline. The four-year course offers classroom learning and hands-on industry experience, and is designed in a work-integrated degree model with 5,000 hours of coding and internship programme.

he higher education domain, where the startups are offering blended learning in technology, business and finance in partnership with universities is a crowded space. PST will find the likes of Scaler School of Business, Newton School, Physics Wallah Institute of innovation and various smaller players as competitors.

“For any edtech, it would be a folly to think that without expanding offline, the businesses will purely survive on digital mode of learning. This is the new learning in the edtech industry now,”

Rustagi claimed, adding that some students from the first batch of bachelors in computer science degree “have already been selected for the prestigious international coding/ computer science programmes and some are doing paid internships”.

GyanDhan (Education Finance): The number of Indian students going abroad for higher studies surged nearly 70% after the pandemic. As banks shied away from education loans because of rising defaults that made up the largest chunk of their bad loan pie, according to a 2024 RBI report, startups gained significant traction. 

While a majority of the edtech companies have tie-ups with banks, NBFCs or fintechs to offer tailored financing solutions to the students, many have gone on to acquire NBFCs on their own to enhance consumer experience.

Classplus made an investment in GyanDhan, a fintech startup claiming to have disbursed over INR 7,000 Cr of education loans to students aspiring to study abroad. Classplus, along with VC fund Pravega Ventures, infused INR 50 Cr into the startup in June to increase the stake. 

Rustagi clarified that GyanDhan is not a strategic acquisition and is a financial investment, banking on the startup’s path to profitability.

“This is more of a VC-style investment where we will benefit if GyanDhan’s revenues soar and they post profits. In fact, Classplus is bullish on more such investments in the future in the edtech domain where we zero in on a company on their business funadmentals and decide whether this is a strategic or financial investment.”

What Lies Ahead For The Edtech Platform  

In 2024, the line between edtech and offline education services companies blurred more than ever, wrote Inc42. It turned blurrier a year later as the industry ran into rapid changes with a hybrid system of education gaining traction. 

Classplus started off as an enabler of the online tutoring or coaching industry. But the look-and-feel of the brand is starkly different today, banking on a much smaller-scale company Testbook and betting big on B2C play in content and credit.

But Classplus isn’t alone, even bigger players are trying out risky bets on various verticals, as edtech seems to move fast towards hybrid learning models.

Industry observers suggest that Classplus should focus on fewer verticals, rather than experimenting with everything in the education sector to gain market share in those industries. 

“Each of these verticals do not appear to have common linkages and would need separate playbooks,” said the edtech investor quoted earlier. “There’s still a need for infrastructure in education – but not in the old SaaS model. Classplus now has content, a B2C user base, and cross-sell optionality. But they’ll need a clearer north star.” he added.

The core may have plateaued, but Classplus isn’t grounded. The emerging industry landscape will determine whether the shift in its business model will click for Classplus.

[Edited By Kumar Chatterjee]

Update Note | July 16, 2025; 21:30

• We have made a few changes in the article pertaining to the current Testbook leadership