Unacademy, once a leading name in India’s edtech sector, may now be worth less than $500 million. This represents a dramatic fall of roughly 85% from its peak valuation of $3.5 billion during the pandemic. The company is undergoing a significant reset and is exploring merger and acquisition opportunities.
The disclosure came from Unacademy’s CEO, Gaurav Munjal, in a detailed note marking the startup’s 10th anniversary. He confirmed the sharp decline in valuation and that the startup is engaged in M&A discussions.
India’s edtech landscape has transformed since the pandemic. During lockdowns, the sector experienced a surge, with companies like Unacademy and Byju’s raising billions, hiring aggressively, and spending heavily on marketing. However, growth stalled as students returned to physical classrooms.
Byju’s, once India’s most valuable startup, has seen its valuation effectively written down to zero and entered insolvency proceedings last September. In a recent development, a U.S. bankruptcy court ordered its founder to pay over $1.07 billion for ignoring court directives related to the transfer of $533 million that was never recovered.
In contrast, Physics Wallah, previously seen as an underdog, has turned profitable and expanded. It enjoyed a strong debut on the public markets last month.
In his note, Munjal described the past three years as the most difficult period for the founders, marked by shrinking demand, intense competition, and internal turmoil. The company, which had never experienced a month of decline before 2021, lost market share in the very segment it helped pioneer.
Munjal attributes the slump to a rapid market shift post-pandemic. As students returned to offline learning and competitors launched lower-priced offerings modeled on Unacademy’s own early strategy, demand declined and growth stagnated. He admitted the company became complacent and failed to innovate on pricing as rivals undercut them.
Recently, Munjal has focused increasing attention on AirLearn, his new AI-first language learning app that mimics Duolingo’s gamified approach. This shift has reportedly caused friction with some Unacademy investors, who feel the core business was neglected during a challenging time.
Founded in 2015, Unacademy has raised approximately $854.3 million from investors including SoftBank, Tiger Global, General Atlantic, and Peak XV Partners.
Munjal stated that Unacademy has spent the last two years overhauling operations. The company slashed its annual burn from about $155.7 million in 2022 to less than $19.5 million this year. This was achieved through significant layoffs, cuts to marketing costs, and a refocus on its core subscription business.
Recent reports suggest that rival UpGrad has discussed acquiring Unacademy for an amount between $300 and $400 million.