Unacademy’s Gaurav Munjal confirms M&A on the table

In the Indian edtech space, PhysicsWallah, which recently got listed on the stock exchanges, stands as an aberration. Others, once celebrated as segment disruptors, are now either a lost case or fighting for survival. After raising its largest funding round of $440 million in 2021 from Temasek, Tiger Global, Softbank Vision Fund and others to take its valuation to $3.5billion, Unacademy, now valued at less than $500 mn is looking for a buyout. In a longish post on social media platform X, Unacademy co-founder Gaurav Munaj confirmed that his firm is actively in talks for possible mergers and acquisitions opportunities. “Yes, we are in M&A conversations, and yes, if we find a win-win situation where consolidation can lead to a stronger entity, we will go ahead with this,” he wrote.

Starting out as a YouTube channel and officially launching its platform in 2015, the firm launched its subscription model in 2019. The Covid lockdown that led to a huge business surge, leading to quick and successive fundraising, took the company from a $100M valuation at the start of 2019, to $1.5B in September 2020 and $3.4bn by 2021. Similar in playbook to how once famed rival Byjus looked at growth, Unacademy bulked up quickly on the back of acquisitions such as Kreatryx, Prepladder, Coursavy, all in 2020 and others like TapChief, Handa Ka Funda, among others.

However, ever since it peaked in terms of valuation, things have been going downhill. In 2022, the company saw two rounds of layoffs affecting nearly 5000 people, including full-time and contractual employees. “In 2022, three things happened simultaneously: 1. The entire game changed. The game was no longer about raising funds and showing top-line growth, but it was about profitability 2. Learners went back to offline centres for post-COVID 3. Few competitors copied every single thing about our product and our YouTube playbook and launched a one-tenth cheaper product,” Gaurav wrote, reasoning the shift in the market.

While layoffs continued in 2023 and 2024, nearly 10 per cent of the remaining workforce was shown the door in both years. Munjal, who stepped down as the CEO of the firm earlier this year, also admits to the lapses in decision-making. “We didn't realise that the market had shifted, and the primary online product was no longer needed. In fact, a supplemental product which was much cheaper was needed. We got complacent. We invented the playbook, but we stopped innovating on price. A competitor came in, used our own playbook against us with a cheaper model, and beat us at our own game while we were distracted. And all this while we were also battling internal issues which arise from bringing down burn from 1400 crores a year to almost zero, and we were learning how to run offline centres because we had been an online tech product company from the beginning. Without any experience in running ops-heavy services businesses”.

With reports of Ronnie Screwvala’s Upgrad in advanced stages of talks with the company for a discount even at its current valuation, Munjal said with a revenue of 600cr with a likelihood ofturning profitable next year, he said, “Three years ago, I used to care a lot about this(valuation, which probably led us to make some bad decisions - this chase of valuation. But today, I care more about building great products, having great unit economics, and growing profitably”.