Gaurav Munjal, CEO, Unacademy
Test prep startup Unacademy is in advanced talks with higher education and upskilling firm Upgrad for an all-stock acquisition valuing it at around $300–320 million, people aware of the matter told ET. The deal, if concluded, would mark a 90% cut from Unacademy’s peak valuation of $3.4 billion in 2021.
This development comes after failed discussions with rival Allen Career Institute for a potential sale. On December 4 last year, ET had reported that Unacademy was in talks with Kota-based Allen Career Institute for a potential acquisition, valuing the company at around $800 million. The deal talks, however, failed over differences in valuation.
Under the proposed structure, Unacademy shareholders will receive shares in Upgrad, valued at $2 billion presently, people in the know said. The Ronnie Screwvala-founded company is preparing to go public and the acquisition is expected to provide Upgrad access to around Rs 1,200 crore of Unacademy’s cash reserves, said one of the persons cited above.
Singapore’s sovereign wealth fund Temasek, a common investor in both companies, holds around 22% in Upgrad and 5% in Unacademy, according to Tracxn data.
“The talks have been ongoing for the last few months and some liquidity preference terms are being discussed for Unacademy’s late-stage investors,” said one person aware of the deal. “While it is likely to be a stock deal, some investors are seeking a partial cash exit. That remains a sticking point.”
Leadership changes
On May 28, ET had reported that Unacademy cofounders Gaurav Munjal and Roman Saini were in talks to exit the firm, with Sumit Jain expected to take over as CEO of the test prep business. Jain, who joined Unacademy in 2020 through the acquisition of his startup Opentalk, is expected to continue in his role for a few years after the acquisition, one of the persons said.
Unacademy’s board includes representatives from SoftBank, General Atlantic, Zeta founder Bhavin Turakhia, and Udaan cofounder Sujeet Kumar, along with the cofounders. The leadership changes came amid growing focus by Munjal and Saini on their language learning app AirLearn, which is said to be exploring external funding.
Also Read: Unacademy’s Airlearn hits 70,000 daily users, $2 million bookings run rate
Sector consolidation
If the deal goes through, it will mark one of the largest consolidation moves in India’s edtech sector, which has been struggling through a prolonged post-Covid slowdown. The pandemic-era boom in online learning has long faded, and the industry continues to recover from the collapse of Byju’s, once valued at $22 billion.
Bengaluru-based Unacademy has faced similar challenges, shifting from its online-only roots as a YouTube channel a decade ago to an increasingly offline-focused model.
The development was first reported by online publication Moneycontrol.
Unacademy has raised a total of $880 million in funding, including $440 million in August 2021 in a round led by Temasek, with participation from Tiger Global, Dragoneer Investment Group, Mirae Asset Venture and others. Upgrad has raised about $330 million and was last valued at $1.9 billion.
For FY24, Unacademy reported an operating revenue of Rs 840 crore, down 7% year-on-year. Its net loss narrowed to Rs 631 crore, a 62% reduction from FY23, following a series of cost-cutting measures and layoffs. The company is yet to file its FY25 financials.
This development comes after failed discussions with rival Allen Career Institute for a potential sale. On December 4 last year, ET had reported that Unacademy was in talks with Kota-based Allen Career Institute for a potential acquisition, valuing the company at around $800 million. The deal talks, however, failed over differences in valuation.
Under the proposed structure, Unacademy shareholders will receive shares in Upgrad, valued at $2 billion presently, people in the know said. The Ronnie Screwvala-founded company is preparing to go public and the acquisition is expected to provide Upgrad access to around Rs 1,200 crore of Unacademy’s cash reserves, said one of the persons cited above.
Singapore’s sovereign wealth fund Temasek, a common investor in both companies, holds around 22% in Upgrad and 5% in Unacademy, according to Tracxn data.
“The talks have been ongoing for the last few months and some liquidity preference terms are being discussed for Unacademy’s late-stage investors,” said one person aware of the deal. “While it is likely to be a stock deal, some investors are seeking a partial cash exit. That remains a sticking point.”
Leadership changes
On May 28, ET had reported that Unacademy cofounders Gaurav Munjal and Roman Saini were in talks to exit the firm, with Sumit Jain expected to take over as CEO of the test prep business. Jain, who joined Unacademy in 2020 through the acquisition of his startup Opentalk, is expected to continue in his role for a few years after the acquisition, one of the persons said.
Unacademy’s board includes representatives from SoftBank, General Atlantic, Zeta founder Bhavin Turakhia, and Udaan cofounder Sujeet Kumar, along with the cofounders. The leadership changes came amid growing focus by Munjal and Saini on their language learning app AirLearn, which is said to be exploring external funding.
Also Read: Unacademy’s Airlearn hits 70,000 daily users, $2 million bookings run rate
Sector consolidation
If the deal goes through, it will mark one of the largest consolidation moves in India’s edtech sector, which has been struggling through a prolonged post-Covid slowdown. The pandemic-era boom in online learning has long faded, and the industry continues to recover from the collapse of Byju’s, once valued at $22 billion.
Bengaluru-based Unacademy has faced similar challenges, shifting from its online-only roots as a YouTube channel a decade ago to an increasingly offline-focused model.
The development was first reported by online publication Moneycontrol.
Unacademy has raised a total of $880 million in funding, including $440 million in August 2021 in a round led by Temasek, with participation from Tiger Global, Dragoneer Investment Group, Mirae Asset Venture and others. Upgrad has raised about $330 million and was last valued at $1.9 billion.
For FY24, Unacademy reported an operating revenue of Rs 840 crore, down 7% year-on-year. Its net loss narrowed to Rs 631 crore, a 62% reduction from FY23, following a series of cost-cutting measures and layoffs. The company is yet to file its FY25 financials.