Unacademy, once one of India’s best-known edtech startups, may now be worth less than $500 million, down 85% from its peak pandemic-era valuation, as the company undergoes a major reset and explores merger and acquisition options.
The company’s valuation has plummeted from a peak of $3.5 billion three years ago to less than $500 million today, Unacademy CEO Gaurav Munjal said Wednesday in a detailed note posted on X to mark the startup’s 10th anniversary. He also confirmed that the startup is in M&A negotiations.
India’s edtech landscape has been disrupted since the pandemic, with the sector seizing a rare opportunity during the lockdown. Startups like Unacademy and Byju’s raised billions of dollars, hired at will, and invested heavily in sales and marketing to attract customers, but growth stalled after lockdowns eased and students returned to offline classes.
Byju’s, India’s most valuable startup just three years ago, had its valuation reduced to virtually nothing and entered bankruptcy proceedings in September last year. In November, a U.S. Bankruptcy Court ordered founder Biju Raveendran to pay more than $1.07 billion, citing “evasive and incomplete” responses and unrecovered transfers by the company’s U.S. arm, in defiance of court instructions.
Meanwhile, Physics Waller, long seen as an underdog, has turned profitable and continued to expand, making a strong debut on the public markets last month.
Unacademy’s Munjal said in a note that the past three years have been marked by shrinking demand, increased competition and internal turmoil as startups suffered losses and abandoned aggressive expansion plans.
“For us founders, personally, it has been the most difficult three years of our lives so far, because until 2021 we had never experienced a single month of degrowth. [sic]“But over the last three years, we literally lost market share to the game we invented, and it hurt,” he writes.
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Munjal believes the downturn was caused by the rapid change in market dynamics post-pandemic. As students returned to offline classrooms and competitors launched lower-cost services modeled on Unacademy’s earlier strategy, the company saw demand decline and growth stall.
“We were complacent,” he wrote, adding that the company failed to innovate on price even as rivals lowered prices.
In recent months, Munjal has increasingly focused on AirLearn, a new AI-first language learning app that mimics Duolingo’s gamified approach. The change created friction with some Unacademy investors who felt the core edtech business was adrift in difficult times, people familiar with the matter told TechCrunch.
Founded in 2015, Unacademy has raised approximately $854.3 million in 13 funding rounds, according to PitchBook, and its backers include SoftBank, Tiger Global, General Atlantic, and Peak XV Partners.
Munjal said Uacademy has spent the past two years overhauling its operations, reducing annual spending from 14 billion rupees (about $155.7 million) in 2022 to less than 1.75 billion rupees (about $19.5 million) this year. The startup has significantly reduced its headcount, cut marketing costs and refocused its core subscription business.
According to recent reports, rival UpGrad is considering acquiring Unacademy for $300 million to $400 million.
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