India's rapidly-growing edtech sector is beginning to show chinks in its armour. A month after Lido Learning asked over 1,200 employees to tender their resignations, another IPO-bound edtech company Unacademy, operated by Sorting Hat Technologies Pvt Ltd, has asked over 100 employees from its PrepLadder team amid “restructuring” of the organization, two people aware of the matter told VCCircle.
Unacademy, which is currently valued at $3.44 billion and counts global venture capital (VC) firms including Sequoia Capital, Tiger Global Management, SoftBank, among others as its backers, did not comment on the number of employees laid off, but acknowledged the development.
“Based on the evolving nature of the business, the management team conducts regular internal reviews and assessments to improve efficiency. A recent assessment has led to the restructuring of the organization which has made certain roles redundant for consultants,” said a spokesperson for Unacademy.
“We have discussed and parted ways with certain consultants in accordance with their respective contracts. The company has, in good faith, offered certain additional benefits for these consultants which are over and above the entitlements in their contracts,” the spokesperson added.
Inc42 first reported on the development.
PrepLadder was founded by Deepanshu Goyal, Vitul Goyal, and Sahil Goyal in 2016. PrepLadder Pvt Ltd, which owns and operates an online medical test preparation application portal called PrepLadder, was acquired by Unacademy in July 2020 for $50 million. The company back then had claimed to have over 80,000 subscribers to its platform. PrepLadder, before getting acquired, had not raised any funds from private equity (PE) or VC companies.
PrepLadder was Unacademy’s third acquisition. The company had previously acquired Kreatryx, an online preparation platform for the Graduate Aptitude Test in Engineering and the Engineering Services Exam and WiFiStudy, an online learning platform on YouTube. Bengaluru-based Unacademy is not the only edtech company that has acquired other companies in a bid to expand vertically, horizontally and geographically.
Many edtech companies, especially unicorns, or startups with over $1 billion valuation, have adopted the inorganic route to expand after demand for online learning surged post the outbreak of Covid-19 pandemic, that forced millions of students to study from home. VCCircle had reported in December that the five edtech unicorns as of 2021, had invested close to $3 billion for mergers and acquisitions in 2021 alone.
While the surge in demand for remote learning has benefited the edtech sector over the last two years, it has also led to intense competition, hitting prospects of some smaller companies. Lido Learning, while asking over 1,200 of its employees to resign, had said the company was looking to wind down its operations amid a funding crunch.
For Unacademy, the latest development comes at a time when the company had recently publicly said it is planning to go for an initial public offering (IPO) in two years. Gaurav Munjal, Co-founder and Chief Executive Officer of the company had announced the company’s plans to go public at the launch of ‘Unacademy Store,’ which it had launched with an aim of marketing the platform's offerings to learners. Munjal had also said that the company’s core business was on track to achieve profitability.
Founded by Munjal, Hemesh Singh and Roman Saini in 2015, Bengaluru-based Unacademy specializes in test preparation for a wide array of competitive examinations including civil service, engineering and medical entrance and banking.
