India’s edtech sector has experienced a seismic shift since its pandemic heyday, with former heavyweight Unacademy now facing a stark reality check. According to recent revelations from CEO Gaurav Munjal, the once-celebrated startup has seen its valuation plummet by a staggering 85%, dropping from $3.5 billion to under $500 million in just three years.
In a candid message posted on X commemorating the company’s 10th anniversary, Munjal confirmed both the valuation collapse and ongoing merger and acquisition discussions, signaling a potential end to Unacademy’s independent journey.
The Rise and Fall of India’s Edtech Darlings
The COVID-19 pandemic created an unprecedented boom for online education platforms in India. With physical classrooms shuttered during lockdowns, companies like Unacademy and Byju’s capitalized on the sudden shift to remote learning. Flush with venture capital, these startups embarked on aggressive expansion campaigns, pouring resources into marketing and rapidly growing their teams.
However, the post-pandemic landscape has proven brutally challenging. As students returned to traditional classrooms, demand for online education services contracted sharply. Unacademy, which had enjoyed consistent growth until 2021, suddenly faced declining market share in a sector it had helped pioneer.
“The last three years represented the most challenging period we’ve ever experienced as founders,” Munjal acknowledged in his statement. “Until 2021, we had never seen a single month of negative growth. But recently, we watched competitors erode our position in a market we essentially created.”
Edtech’s Shifting Fortunes: Winners and Losers
The sector’s volatility has created dramatic reversals of fortune. Byju’s, once India’s most valuable startup, has suffered an even more catastrophic collapse than Unacademy. After defaulting on loan payments and facing multiple legal challenges, the company entered insolvency proceedings in September 2023. Its founder, Byju Raveendran, was recently ordered by a U.S. bankruptcy court to pay over $1.07 billion for failing to comply with court directives regarding a $533 million fund transfer.
Meanwhile, Physics Wallah has emerged as an unexpected success story. The company, long viewed as an underdog in the space, has achieved profitability while continuing to expand its operations. Last month, Physics Wallah completed a successful public market debut, demonstrating that viable business models can still thrive in the sector despite broader challenges.
Strategic Missteps and Market Realignment
Munjal’s reflection highlighted several factors contributing to Unacademy’s decline. Chief among these was complacency in the face of changing market dynamics. As competitors introduced lower-priced alternatives modeled on Unacademy’s early approach, the company failed to adapt its pricing strategy, allowing rivals to undercut its offerings.
“We got complacent,” Munjal admitted. The company’s inability to innovate on price points while maintaining quality proved costly as market conditions shifted and competition intensified.
Internal tensions have further complicated Unacademy’s situation. Munjal has increasingly focused his attention on AirLearn, a new AI-powered language learning application that employs gamification techniques similar to Duolingo. This pivot has reportedly created friction with some investors, who feel the core edtech business has been neglected during a critical period.
Restructuring for Survival
Facing existential pressure, Unacademy has implemented dramatic operational changes over the past two years. The company has slashed its annual cash burn from ₹14 billion (approximately $155.7 million) in 2022 to less than ₹1.75 billion (about $19.5 million) in 2024 – a reduction of nearly 88%.
This financial discipline has come through painful measures, including significant workforce reductions, substantial cuts to marketing expenditures, and a strategic refocusing on its core subscription business model. The company has essentially abandoned its previous aggressive expansion plans in favor of sustainability.
Founded in 2015, Unacademy has raised approximately $854.3 million across 13 funding rounds, according to PitchBook data. Its investor roster includes prominent firms such as SoftBank, Tiger Global, General Atlantic, and Peak XV Partners (formerly Sequoia Capital India).
The Future: Potential Acquisition
Industry reports suggest that rival edtech platform UpGrad has discussed acquiring Unacademy at a valuation between $300 million and $400 million – a fraction of its former worth but potentially offering a path forward for the struggling company.
Unacademy’s journey illustrates the volatile nature of venture-backed startups in rapidly evolving markets. The company’s meteoric rise during favorable conditions was followed by an equally dramatic contraction when the environment changed. This pattern reflects broader challenges facing the edtech sector as it transitions from pandemic-era expansion to sustainable business models in a post-COVID world.
As Unacademy navigates this critical juncture, its story serves as a cautionary tale about market timing, strategic adaptability, and the dangers of prioritizing growth over sustainable unit economics – lessons that resonate far beyond India’s edtech landscape.