SoftBank-backed Unacademy sacked about 10% of its workforce, or around 350 employees, on Monday, citing unfavourable market conditions and due to the ongoing funding slowdown for tech startups.
Unacademy CEO Gaurav Munjal announced the layoffs in an internal email to employees, saying that all those affected will be given a severance pay equivalent to the notice period and an additional two months. He added that employees will also get an accelerated one year vesting period of their sop shares. FE has reviewed a copy of the email.
“Even though we realised this much earlier and took some stringent measures such as reducing our monthly burns, controlling our operational spends, limiting our marketing budgets and identifying other redundancies within the organisation, it was not enough. We need to keep optimising and building efficient systems for leaner and unprecedented times,” Munjal added.
The fresh round of rationalisation at the Unacademy Group was taken due to the market challenges forcing the company to re-evaluate its decisions, Munjal added. “Funding has significantly slowed down and a large portion of our core business has moved offline,” he said.
After this round of layoffs, at least 900 of its people stand affected, including the 150 employees in June, and the 600 workers the company fired in April.
Unacademy is one of the many edtech unicorns to be laying off staff in the last few months due to a funding crunch.
In the recent past, multiple edtech peers like Vedantu, Invact Metaversity and FrontRow have sacked several employees to reduce their cash burn, while Lido Learning and Udayy each fired all their 100-plus staff and shut shop because their entirely online teaching models didn’t yield desired results.
These purely online edtech firms operate in a hyper-competitive market and have seen their growth rate drop in recent times. The reopening of schools and colleges and a slowdown in funding from venture capital (VC) firms have both weighed on the industry’s performance.
Underscoring the slowdown, Unacademy’s co-founder and chief executive officer, Munjal had earlier written in an email to his employees: “We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months.”
“We must survive the winter. We have a different iconic goal this time. The goal is of profitability. The goal is of generating FCF (free cash flow),” the mail added.
Further, to broaden its revenue streams, Unacademy plans to open 15 offline centres across nine Indian cities in around 30 days. It inaugurated its first such centre in Rajasthan’s Kota earlier in the week.
Unacademy — with a valuation of about $3.4 billion — is the country’s second-most valued edtech firm, after Byju’s, which was last valued at around $22 billion. PhysicsWallah (PW) was the latest edtech unicorn, valued at $1.1 billion.