Edtech unicorn Unacademy is embracing frugality as it looks to turn cash flow positive ahead of its initial public offering (IPO) in the next two years.
In an email to employees, Unacademy chief executive Gaurav Munjal said there are a lot of unnecessary expenses which the company must cut in order to turn profitable.
The edtech startup, which has more than ₹2,800 crore in the bank, said it is not efficient at all. "We spend crores on travel for employees and educators. Sometimes it's needed, sometimes it's not. There are a lot of unnecessary expenses that we do. We must cut all these expenses. We have a strong core business. We must turn profitable asap."
This comes at a time when the total funding raised by Indian startups declined by 33% from $10.3 billion in the first quarter of calendar year 2022 to $6.9 billion in the April-June period, leading to a consensus among market players of a "funding winter" or a downturn in investors' confidence and sentiments towards funding startups.
As part of its plan to turn frugal, Unacademy said meals and snacks will not be complimentary across its offices.
Founders and top management will take a salary cut, the startup says, adding that the founders have already taken a pay cut. "We will implement a cut for management as well."
The startup said it will put "strong guidelines" for travel. "No business class travel for anyone including CxOs and founders. Employees and educators can pay from their own pocket if they want an upgrade."
The company will also do away with certain privileges like dedicated drivers for CxOs.
The edtech unicorn will also shut down some businesses that have failed to find the product-market fit like Global Test Prep.
"Now all of these changes might make it seem that we are in a bad state. Trust me. We are not. We are in a great state. This is the final frontier that we have to conquer. Profitability. And once we do, it will change the game for us," Munjal says in the internal note, adding that the startup is well capitalised.
"Until now, we never had frugality as one of our core values. Honestly since we were focused on growth and the fact that we had raised millions of dollars in capital it wasn’t a priority," he adds.
Indian startups raised $6.9 billion in 409 funding rounds during the three months ended June 2022, according to a report by market intelligence platform Tracxn.
Fundraising during the last three months also witnessed a decline in comparison to the same quarter last year (Q2 2021), where the total funds raised were $10.1 billion.