Unacademy’s Valuation Drops Below $500M, M&A Talks Confirmed
▼ Summary
– Unacademy’s valuation has plummeted from a $3.5 billion peak to under $500 million, and its CEO confirms the company is exploring merger and acquisition options.
– India’s edtech sector, which boomed during pandemic lockdowns, has fractured as demand shrank post-lockdowns and growth stalled for major players like Unacademy and Byju’s.
– Byju’s, once India’s most valuable startup, has seen its valuation written down to near zero and is entangled in major legal and financial insolvency proceedings.
– In contrast, competitor Physics Wallah has become profitable and successfully expanded, including having a strong public-market debut.
– Unacademy’s CEO attributes the slump to post-pandemic market shifts and internal complacency, and the company has drastically cut its annual burn rate and refocused on its core business through layoffs and cost reductions.
The valuation of the Indian edtech firm Unacademy has plummeted to under $500 million, a staggering decline of over 85% from its peak of $3.5 billion during the pandemic. In a candid post marking the company’s tenth anniversary, CEO Gaurav Munjal confirmed both the dramatic devaluation and that the startup is actively engaged in merger and acquisition discussions. This stark reset underscores the severe challenges facing a sector that once attracted massive investor enthusiasm.
The broader Indian edtech landscape has undergone a profound transformation since the lockdown era. During the pandemic, companies like Unacademy and Byju’s capitalized on the sudden shift to online learning, raising billions and expanding aggressively. However, this growth proved unsustainable. As students returned to physical classrooms, demand contracted sharply. Byju’s, once India’s most valuable startup, has seen its valuation effectively erased and is now entangled in insolvency proceedings and significant legal battles. In contrast, competitor Physics Wallah has charted a different course, achieving profitability and a successful public listing.
Reflecting on the past three years, Munjal described a period of intense difficulty marked by shrinking market share, fierce competition, and internal strain. He noted that the company had become complacent, failing to innovate on pricing as rivals launched cheaper alternatives modeled on Unacademy’s own early strategies. “We saw losing market share in the game that we literally invented and it hurt,” he wrote, acknowledging the personal toll on the founding team.
In response to these pressures, Unacademy has undertaken a rigorous operational overhaul. The company has drastically reduced its annual cash burn from approximately $155.7 million in 2022 to under $19.5 million currently. This financial discipline was achieved through significant workforce reductions, deep cuts in marketing expenditure, and a renewed focus on its core subscription offerings.
Meanwhile, Munjal’s increasing personal focus on a new AI-driven language learning app called AirLearn has reportedly caused friction with some investors. These backers are concerned that the core business is being neglected during a critical period. Founded in 2015, Unacademy has raised around $854 million from prominent investors including SoftBank and Tiger Global. Recent industry speculation suggests rival UpGrad has explored a potential acquisition of Unacademy for an estimated $300 to $400 million, a figure that aligns with the company’s newly adjusted valuation.
(Source: TechCrunch)
