UpGrad, the Indian edtech firm, is reportedly in advanced talks to acquire rival Unacademy's core test-preparation business. The potential deal could value Unacademy at $300 million to $400 million, a sharp decline from its last known valuation of $3.44 billion in 2021. This significant markdown reflects a major market correction within India's once-booming online education sector. Sources familiar with the discussions suggest a term sheet for the acquisition could be signed within the next three weeks.^{[1][2][3][4][5][6][7][8][9][10]} ### Details of the Proposed Deal The acquisition talks focus on Unacademy's core test-preparation operations, which include its expanding network of offline learning centers. As part of the proposed transaction, Unacademy's language-learning application, AirLearn, is expected to be spun off into a separate entity. UpGrad would not hold any equity stake in AirLearn after the acquisition.^{[1][2][3][4][5][6][8][10]} The reported valuation of $300 million to $400 million for Unacademy's core business represents a more than 90% drop from its peak valuation of $3.44 billion in August 2021.^[5][6] This drastic fall highlights the cooling of India's edtech boom that was fueled by the pandemic.^[4][5][6][8] Ronnie Screwvala, co-founder of UpGrad, and Gaurav Munjal, co-founder of Unacademy, have both declined to comment on the ongoing negotiations.^[2][7][9] However, industry observers view this potential merger as one of the largest consolidation moves in India's education technology sector this year.^{[2][4][5][6][8][9]} ### Unacademy's Financial Shift and Market Challenges Founded in 2015, Unacademy quickly rose to prominence as a leading edtech unicorn during the COVID-19 pandemic, attracting significant investment from major players like General Atlantic, SoftBank, and Temasek.^{[2][4][11][12][6][8]} Its Series H funding round in August 2021, led by Temasek, valued the company at $3.44 billion.^[13][11][14] However, the post-pandemic period brought a "funding winter" and a market correction, leading to significant challenges for many edtech firms.^{[1][4][5][7][15][16][17][18]} Unacademy has undertaken aggressive cost-cutting measures in recent years. The company successfully reduced its annual cash burn from over ₹1,000 crore at its peak to approximately ₹100 crore currently. It ^{[2][3][4][6][8]}also holds substantial cash reserves of about ₹1,200 crore, making it an appealing acquisition target despite the lower valuation. For t^{[2][3][4][6][8]}he fiscal year ending March 2024, Unacademy reported revenues of ₹839 crore, a decrease of about 7% year-on-year. Despite the revenue dip, its net losses narrowed significantly by 62% to ₹631 crore. The comp^[2][6]any has also faced multiple rounds of layoffs since 2022, impacting thousands of employees as it streamlined operations and adjusted to changing market dynamics. These lay^{[12][19][20][21][22]}offs were aimed at improving efficiency and reducing redundant roles. Unacademy^[12] has also shifted its focus from purely online education to a hybrid model that includes physical coaching centers. ### UpGr^{[2][4][5][21][6]}ad's Expansion Strategy and Edtech Consolidation For UpGrad, co-founded by Ronnie Screwvala, Mayank Kumar, and Phalgun Komandur, the potential acquisition of Unacademy's test-prep business aligns with its ongoing strategy to expand its learning ecosystem. UpGrad ha^[2][7][9]s a strong presence in higher education and professional skilling, and this deal would significantly broaden its footprint into competitive exam preparation and K-12 segments. The compa^[2][9]ny has been actively pursuing mergers and acquisitions to grow its user base and enter new verticals, including previous acquisitions in test-prep and recruitment. Temasek,^{[23][24][17][18][25]} Singapore's state investment firm, is a key investor in both UpGrad and Unacademy, having led Unacademy's $440 million Series H round in 2021 and also investing in UpGrad. This shar^[4][7][8]ed investor presence creates a natural alignment between the two entities. The Indian edtech sector is currently undergoing a significant phase of consolidation, with financially stronger companies acquiring assets of troubled unicorns. This tren^{[1][5][15][18]}d is also marked by a shift towards hybrid models that combine online learning with physical centers, a strategy that Unacademy has already begun to embrace. This rep^[1][5]orted deal underscores the continued evolution of the Indian edtech landscape, where companies are adapting to a more cautious funding environment and a renewed focus on sustainable business models.

AI Insights Hub