The Unacademy Saga: Is the Ed-Tech Unicorn in Trouble? 

This marks Unacademy's third round of layoffs in recent years. In March 2023, the company reportedly reduced its workforce by 12 per cent, or around 380 employees.
The Unacademy Saga: Is the Ed-Tech Unicorn in Trouble? 

Edtech platform Unacademy recently laid off about 250 employees from various departments, including 150 in sales, marketing, and technology teams, as per media reports. 

This marks Unacademy's third round of layoffs in recent years. In March 2023, the company reportedly reduced its workforce by 12 per cent, or around 380 employees. In April 2022, it terminated about 1,000 contractual and full-time staff members. 

After the recent layoffs, a spokesperson for the company said that this was necessary, keeping in mind the company's goals and vision for the year, as we focus all our efforts on sustainable growth and profitability. Consequently, some roles have been impacted. 

Immediately after this, Unacademy founder Gaurav Munjal took to X (formerly Twitter) and said that Unacademy will have its best year in terms of growth and profitability. He added, “We also have many years of runway. We are building Unacademy for the long run. Ignore the rumors." 

The latest layoffs follow a recent downsizing at Unacademy Group’s medical entrance test prep platform, PrepLadder, which laid off around 145 employees. This was PrepLadder's third round of layoffs in the past three years. Unacademy acquired PrepLadder in July 2020 for $50 million. 

The YouTube Superstar 

Unacademy started as a YouTube channel in 2010 by engineering student Gaurav Munjal to ‘democratize education in the country’. 

Munjal wrote in a blog that ‘this idea of an app would make the creation of educational lessons very easy’ in the summer of 2015. The company evolved from a channel to a platform. The idea was simple in the beginning—to build an app that would reduce the three- to four-hour learning curve for educational lessons to a three- to four-minute learning curve. 

Read: Unacademy Co-founder and CTO Hemesh Singh Steps Down, Takes Advisory Role

With time, the company claims to have expanded to have 1 million+ learners and 40,00 live classes in 2017. This quickly expanded to 200k+ daily active users. Now, it has three apps, Unacademy centers for NEET, IIT JEE, UPSC exams, and several study materials. 

2020: The year of endless growth 

As confinement at home became a reality, Unacademy’s expansion increased. Leveraging online classes, the edtech industry started increasing rapidly. Edtech became the favorite place for venture capitalists and private equity players, with around $2.2 billion reportedly invested in that sector. 

The start-up also became a unicorn after it raised $150 million in September 2020 at a post-money valuation of $1.45 billion from Facebook, Blume Ventures, Nexus Partners, General Atlantic, and Sequoia Capital. The company’s revenue also increased to over Rs 86 crore in FY 20 from Rs 22 crore in FY19. 

It was then that the edtech platform acquired Kreatryx, PrepLadder, Codechef, and NeoStencil, which provide courses on GATE, medical exams, coding, and government jobs. 

The bubble burst for the edtech sector 

As offline once again became a constant part of our lives after the COVID-19 pandemic, the edtech sector was hit. There were already talks about whether the sector could sustain its skyrocketing growth in the pandemic; it seems like it couldn’t. 

Since 2022, cost optimization and layoffs have become constants in the edtech space, with Byju’s being the biggest example. As per the Observer Research Foundation, funding for edtech companies fell sharply, from $2.6 billion in 2022 to $297.3 million in 2023. 

All of a sudden, Byju’s, Unacademy, and PhysicsWallah started expanding in the offline space. Unacademy opened its first offline store in 2022 in New Delhi. Speaking to businessline about the offline expansion, Karan Shroff, Partner and CMO, Unacademy, said, “India does have a trust element when you are present offline as a brand, and we wanted to have that with our learners. 

While agreeing that they overestimated the potential of online learning, Munajl told the Times of India, “I don't think an edtech company can become big in India without having an offline presence." The online business has degrown, but offline has massively bounced back.” 

The Acquisition Spree 

As mentioned before, in 2020, Unacademy acquired lots of platforms. However, it didn’t stop there. From 2018 to 2022, the company made 13 acquisitions and launched several new products. The majority of them are either dead or only partially active, as reported by the Mint. 

While Munja didn’t agree with the Mint assessment, he did admit that the company spread itself way too much. Thus, Munjal reportedly said that he would like to focus on the company's core business and two or three projects that he is working on. 

In FY22, Unacademy reported a net loss of Rs 1,678.15 crore, down from Rs 2,848 crore the previous year. Its revenue rose to ₹907 crore (by 26 percent) from ₹719 crore in FY22. To reduce its expenses, around 2,000 employees have been fired by the edtech firm since 2022. 

A potential merger or a solo journey? 

The Entracker reported recently that Unacademy is in talks to merge with K12 Techno, Orchids International Schools’ owner. Both companies will reportedly have 50 percent joint capacity each if the merger does happen, according to the report. 

Both K12 Techno and Unacademy have a common investor, Peak XV. To add to it, the edtech firm made an investment in Orchid School three years ago. 

Meanwhile, The Morning Context has mentioned in its recent story that the edtech firm has approached several investors for a possible merger or a total acquisition. Edtech firm PhysicalsWallah, Coaching Institute Allen, K12 Techno, and several other large education coaching companies add to the report. 

The talks are, however, reportedly in the initial stages. One reason the K12 Techno deal is not working out is because another investor in K12, Kedaara Capital, is reportedly not interested in exploring a deal with Unacademy. The spokesperson for Kedaara Capital denied these allegations and told the Morning Context, “Kedaara Capital was not part of any discussion regarding Unacademy and never advised K12 on the matter.” 

So, will Unacademy sustain itself on its own? That’s what Munjal believes. He has emphasized that the company is being built for the long run, and it has many more years to go. The edtech founder also got support from several people on social media platform X (formerly Twitter), including Ola Founder Bhavish Aggarwal. 

Munjal even posted a picture of Samuel Clemens, known by his pen name Mark Twain, with the quote, "Reports of my death have been greatly exaggerated." 

Related Stories

No stories found.
Outlook Business & Money