Edtech startup Unacademy has announced a fresh round of layoffs, which could affect as much as 20% of its total workforce, sources close to the development told FE. This will be the company’s fourth round of workforce rationalisation in the last 12 months.
In an internal email to employees, Unacademy CEO and co-founder Gaurav Munjal said that 12% of the total employees, totalling 380, will be hit by the current layoffs.
“I never thought I would need to send out another message like this, but here I am. We have taken every step in the right direction to make our core business profitable, yet it’s not enough…Unfortunately, this has led me to take another difficult decision. We will be reducing the size of our team by 12% to ensure we can meet the goals we are chasing in the current realities we face,” Munjal wrote in the email accessed by FE.
“I did not anticipate I would have to do this again, and I’m very sorry…Today, the global economy is enduring a recession, funding is scarce and running a profitable business is key. We have to adapt to these changes, build and operate in a much leaner manner, so we can truly create value for our users and shareholders,” Munjal said in his email.
Unacademy did not respond to calls and emails seeking its response till the time of going to the press.
Before the current round of layoffs, the SoftBank-backed startup had sacked about 10% of its workforce, or around 350 employees, in November 2022, citing unfavourable market conditions and the ongoing funding slowdown for tech startups.
With the latest round of layoffs, at least 1,200 of its employees stand affected, including the 150 employees in June and the 600 workers the company fired in April.
“The job cuts are expected to take place across the test-prep division and the recently demerged CodeChef company’s employees as well,” one of the sources said.
CodeChef, a platform for competitive programming used by both students and professional programmers, on Wednesday said it has demerged from Unacademy and will operate as a standalone enterprise, with its current team leading the firm.
Sources said Unacademy is also considering hiving off or shutting down more subsidiaries, particularly to protect its cash runway during the ongoing funding winter. They also indicated that only certain verticals such as core K-12 NEET, UPSC and IIT-JEE are currently making profits for the firm.
“K-12 and test prep businesses are the most profitable units for the firms, and they internally have classified these units into three categories, named Business Unit-1, Business Unit-2 and Business Unit-3, with each having a business head. Each unit caters to individual exam coaching for UPSC, IIIT-JEE, NEET and other govt exams categories,” a source close to the company said.
Speaking on the condition of anonymity, a venture capital investor with investments in edtech unicorns said although there is still an appetite among equity investors (venture capitalists and PE funds) to invest in edtech players in India, the investments would be reserved only for profitable players.
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 of 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 VC firms have weighed on the industry’s performance.
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 unicorn in the edtech space with a $1.1-billion valuation.
