upGrad to Acquire Unacademy in Edtech Merger

In a significant consolidation move within India’s education technology sector, rival platform upGrad is set to acquire Unacademy through an all-stock transaction. This merger brings together two of the country’s major online learning players. Unacademy’s co-founder and CEO, Gaurav Munjal, confirmed the deal via a social media post, noting the companies have signed a term sheet for a complete share-swap arrangement. The specific valuation remains confidential until the transaction finalizes. This development follows Munjal’s earlier disclosure that Unacademy’s worth had fallen below $500 million, a steep decline from its 2021 peak valuation of $3.5 billion.

The broader Indian edtech industry, which experienced explosive growth during pandemic lockdowns, has faced considerable challenges as students returned to physical classrooms. Demand for online test preparation and learning platforms has cooled significantly. Companies like Unacademy, which expanded aggressively during the peak, have been forced to implement cost-cutting measures, scale back offline expansion plans, and refocus their strategies on core digital offerings.

UpGrad co-founder Ronnie Screwvala stated in a separate announcement that Gaurav Munjal will remain at the helm of Unacademy following the acquisition. Screwvala emphasized that combining the two entities would bolster upGrad’s comprehensive educational model, which spans school-level education, professional upskilling, and lifelong learning courses. The agreement also includes an undisclosed break fee should the deal fail to reach completion. Reflecting on the journey, Munjal acknowledged that Unacademy helped pioneer the modern edtech framework but conceded that the company later lost some strategic focus and market share, adding that the sector overall has lacked substantial product innovation in recent years.

Founded in 2015, Unacademy rose to prominence as lockdowns pushed millions of Indian students toward digital learning solutions. However, the post-pandemic normalization led the company to reduce operational costs, conduct layoffs, and restructure various business segments. Munjal reported that Unacademy now maintains over $100 million in cash reserves, achieved after a year of consolidating company-operated offline centers with franchise partners and sharpening its focus on primary online products. The company also executed an employee stock buyback valued at approximately $5.4 million, with around forty percent of eligible former staff participating.

According to data from PitchBook, Unacademy has secured about $854.3 million across thirteen funding rounds. Its investor roster includes prominent names such as SoftBank, Tiger Global, General Atlantic, and Peak XV Partners. This proposed merger occurs amid a dramatic reshuffling of India’s edtech competitive field. Byju’s, formerly the nation’s most valuable startup, has seen its valuation effectively erased and entered insolvency proceedings in late 2024.

Conversely, competitor Physics Wallah, once considered a sector underdog, has achieved profitability and successfully expanded, making a robust entry into the public markets last year. Recently, Munjal has increasingly directed his attention toward Airlearn, an AI-driven language learning application that adopts a gamified approach similar to Duolingo. This shift has reportedly caused tension with some Unacademy investors, who believed the core business was being neglected during a critical period, according to sources familiar with internal discussions.

Despite these concerns, Munjal points to Airlearn’s growing user base in markets like the United States, the United Kingdom, Germany, and Canada. He maintains that artificial intelligence holds the potential to drive the next wave of innovation within the education technology space, signaling a continued evolution in how learning platforms develop and deliver their services.

(Source: TechCrunch)