Unacademy Founder Says Startup Is Now Worth Less Than $500 Million, Confirms M&A Talks | TechCrunch

Unacademy, once one of India’s best-known edtech startups, may now be worth less than $500 million, down 85% from its pandemic-era peak valuation, as the company undergoes a steep reset and explores M&A opportunities.

In a detailed note posted On Wednesday He also confirmed that the startup is in merger and acquisition talks.

India’s edtech landscape has been fractured since the pandemic, when the sector saw a rare moment of opportunity during the lockdowns. Startups like Unacademy and Byju’s raised billions, hired people for free and invested heavily in sales and marketing to attract customers, but growth stalled after lockdowns eased and students returned to offline study.

At Byju’s, India’s most valuable startup just three years ago, its valuation was written down to effectively zero, and in September last year the company entered insolvency proceedings. In November, a US bankruptcy court ordered founder Byju Raveendran to pay more than $1.07 billion for ignoring court directives and providing “evasive, incomplete” responses regarding the transfer of $533 million by the startup’s US unit, which was never recovered.

Meanwhile, Physics Wallah, long considered the underdog, has done just that become profitable and continued to grow, having a strong public market debut last month.

In his note, Unacademy’s Munjal noted that the past three years were marked by shrinking demand, increasing competition and internal turmoil as the startup suffered losses and abandoned aggressive expansion plans.

“Personally, for us founders, these were the hardest three years we had ever seen in our lives because we had not seen a single month of degrowth until 2021. [sic]” he wrote. “But over the past three years we’ve seen market share lose in the game we literally invented, and it hurt.”

Munjal believes the slump was caused by a rapid shift in market dynamics post-pandemic. As students returned to offline classrooms and competitors launched cheaper offerings modeled on Unacademy’s early strategy, the company saw demand decline and growth stagnate.

“We became complacent,” he wrote, adding that the company failed to innovate on price even as rivals undercut it.

In recent months, Munjal has been paying increasing attention to AirLearn, its new AI-first language learning app that mimics Duolingo’s gamified approach. That shift has caused friction among some Unacademy investors, who felt its core edtech business was drifting during a rough patch, 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 counts SoftBank, Tiger Global, General Atlantic and Peak XV Partners among its backers.

Munjal said Unacademy has overhauled its operations over the past two years and reduced annual burns from ₹14 billion (about $155.7 million) in 2022 to less than ₹1.75 billion (about $19.5 million) this year. The startup has significantly reduced its workforce through layoffs, cut marketing costs and refocused on its core subscription business.

Recent reports have suggested that rival UpGrad has discussed acquiring Unacademy between $300 and $400 million.