Unacademy’s founder says startup is now worth less than $500M, confirms M&A talks

Unacademy, a prominent player in India's edtech sector, has seen its valuation drop to below $500 million, marking an astounding decline of 85% from its peak during the pandemic. This significant downturn comes as the company reassesses its strategy and considers potential merger and acquisition opportunities. In a recent message on X, celebrating the startup's 10th anniversary, CEO Gaurav Munjal disclosed that Unacademy's valuation has plummeted from $3.5 billion three years ago to its current figure. The edtech landscape in India has drastically changed since the pandemic, with companies like Unacademy and Byju’s initially thriving during lockdowns, raising substantial funds and expanding aggressively. However, as students returned to in-person classes, growth for these startups stalled, leading to dire consequences. Byju’s, which was once India’s most valuable startup, has seen its valuation effectively reduced to zero and is now undergoing insolvency proceedings. The founder, Byju Raveendran, was recently ordered by a U.S. bankruptcy court to pay over $1.07 billion due to noncompliance with court mandates regarding the transfer of funds. Amidst this turmoil, Physics Wallah, a competitor, has achieved profitability and recently made a successful entry into public markets. Munjal reflected on the challenging last three years for Unacademy, highlighting a period marked by declining demand, fierce competition, and internal struggles. He expressed how unprecedented this period was for the founders, stating they had not experienced any monthly decline until 2021. The shift in market dynamics post-pandemic has been stark, with students returning to traditional classrooms and competitors offering lower-priced alternatives. Munjal acknowledged that Unacademy had become complacent and failed to adapt its pricing strategy in response to these changes. In recent months, Munjal has turned his attention to AirLearn, an AI-driven language learning application inspired by Duolingo’s gamified model. However, this pivot has reportedly caused tension with some investors who believe the core edtech business is suffering during a critical time. Founded in 2015, Unacademy has successfully raised approximately $854.3 million across 13 funding rounds, with major investors including SoftBank and Tiger Global. Over the past two years, the company has worked to streamline operations, notably reducing its annual losses from ₹14 billion (around $155.7 million) in 2022 to less than ₹1.75 billion (approximately $19.5 million) this year. Reports have emerged suggesting that rival UpGrad is considering acquiring Unacademy for a sum between $300 and $400 million.