Unacademy’s founder reveals that the startup’s valuation has dropped below $500M and acknowledges ongoing merger and acquisition discussions

Unacademy Faces Major Valuation Drop Amid Industry Shifts

Unacademy, once a leading name in India’s edtech sector, has seen its valuation plummet to under $500 million—a dramatic 85% decrease from its peak during the pandemic. The company is currently considering mergers and acquisitions as it navigates this challenging period.

On the occasion of Unacademy’s 10th anniversary, CEO Gaurav Munjal shared in a detailed message on X that the company’s worth has sharply declined from its $3.5 billion high three years ago. He also acknowledged ongoing discussions regarding potential mergers or acquisitions.

Changing Fortunes in India’s Edtech Industry

The edtech boom in India, fueled by pandemic lockdowns, has faded as students return to traditional classrooms. During the pandemic, companies like Unacademy and Byju’s attracted massive investments and expanded rapidly. However, this growth stalled once in-person learning resumed, leading to significant setbacks for the sector.

Byju’s, which was India’s most valuable startup not long ago, has seen its valuation collapse to nearly nothing and entered insolvency proceedings in September of last year. In addition, a U.S. bankruptcy court ordered founder Byju Raveendran to pay over $1.07 billion for failing to comply with court orders and providing incomplete information about a $533 million transfer by the company’s U.S. branch that was never recovered.

In contrast, Physics Wallah, once considered an underdog, has achieved profitability and continued to grow, recently making a successful debut on the public market.

Unacademy’s Internal Struggles and Market Challenges

Munjal reflected that the past three years have been the most difficult for Unacademy’s founders, marked by declining demand, fierce competition, and internal upheaval. The company faced losses and was forced to abandon its ambitious expansion plans.

“For us founders, these last three years have been the toughest we’ve ever experienced. Until 2021, we hadn’t seen a single month of negative growth,” Munjal wrote. “But recently, we’ve watched our market share slip away in a field we helped create, and it’s been painful.”

He attributes the downturn to rapid changes in the market after the pandemic, with students returning to offline education and competitors introducing more affordable products inspired by Unacademy’s original approach. As a result, Unacademy struggled to maintain demand and growth.

“We became complacent,” Munjal admitted, noting that the company failed to adjust its pricing strategy while rivals offered lower-cost alternatives.

Leadership Focus Shifts and Investor Concerns

Recently, Munjal has shifted much of his attention to AirLearn, a new AI-powered language learning app modeled after Duolingo’s gamified style. This move has reportedly caused tension with some Unacademy investors, who worry that the core edtech business is being neglected during a critical time.

Funding History and Cost-Cutting Measures

Since its founding in 2015, Unacademy has secured roughly $854.3 million across 13 funding rounds, with major investors including SoftBank, Tiger Global, General Atlantic, and Peak XV Partners.

Munjal stated that over the past two years, Unacademy has undergone significant restructuring, reducing its annual spending from ₹14 billion (about $155.7 million) in 2022 to under ₹1.75 billion (around $19.5 million) this year. The company has implemented layoffs, cut back on marketing, and renewed its focus on its main subscription offerings.

There have also been recent reports that competitor UpGrad has explored acquiring Unacademy for a price between $300 million and $400 million.