Why Unacademy is being sold at 90% discount
What's the story
Edtech giant UpGrad is set to acquire rival platform Unacademy in an all-stock deal. The acquisition comes after months of negotiations and is expected to be finalized soon. The deal values Unacademy at ₹2,055 crore ($218 million), a staggering 90% lower than its peak valuation of $3.4 billion during the 2021 funding boom.
Financial details
Unacademy has ₹900-950 crore in cash
At the time of closing, Unacademy is expected to have ₹900-950 crore in cash on its books. This financial cushion is a major attraction for UpGrad. The Ronnie Screwvala-led company plans to file for Competition Commission of India (CCI) approval this week. "The binding agreements will be signed over the next few days and the application for CCI approval will be submitted in the coming week," a person familiar with the details told the Economic Times.
Funding round
UpGrad to raise ₹375 crore internal round
Along with the acquisition, UpGrad is also in talks to raise an internal round of about ₹375 crore from existing backers such as Temasek. The Singapore sovereign wealth fund is a common investor in both companies, holding 22% stake in UpGrad and 5% in Unacademy. The deal marks one of the biggest consolidation moves in India's edtech sector, which is still recovering from a post-COVID slump.
Business evolution
Unacademy's rapid growth and funding history
Founded in 2010 as a YouTube channel, Unacademy has evolved from an online-only model to one that now leans heavily on offline centers. The company has raised a total of $880 million in funding, including its largest-ever round of $440 million in August 2021 led by Temasek. For FY25, Unacademy recorded ₹702 crore in operating revenue, down 16% year-on-year.
Decline
The decline of Unacademy
As students returned to physical classrooms post COVID-19, Unacademy's online growth stalled, and its subsequent pivot to high-cost offline centers failed to yield the necessary margins to sustain its previous "unicorn" status. To counter the dip in online demand, Unacademy invested heavily in physical "Unacademy Centres." However, this pivot was capital-intensive and met with fierce competition from established offline giants like Allen. The high costs of running physical centers, combined with lower-than-expected margins, put a massive strain on their finances
Acquisition plans
UpGrad also acquires Internshala for ₹80 crore
Along with the Unacademy deal, UpGrad has also acquired Internshala in an all-stock deal valuing the internship and job-search platform at ₹80 crore. "Once the Unacademy deal and the internal round close, UpGrad will have more than ₹1,300 crore in cash," a person familiar with the details told the Economic Times. "It plans to deploy this capital toward organic growth opportunities, including scaling its B2B (business-to-business) and enterprise segments."