Even as edtech startup valuations have been soaring with a surge in demand for remote learning over the last two years, chinks have begun showing up in their armour.
Initial public offering (IPO)-bound edtech unicorn Unacademy, operated by Sorting Hat Technologies Pvt Ltd, has laid off nearly 600 employees comprising nearly 10% of its workforce, two persons aware of the development told VCCircle.
The Softbank-backed firm has laid off full-time employees from its sales and marketing team, along with a few contractual staff and educators or tutors, the people said on condition of anonymity.
A spokesperson of Unacademy confirmed the development, stating, "Based on the outcome of several assessments, a small subset of the employee, contractor and educator roles were re-evaluated due to role redundancy and performance, as is common for any organization of our size and scale."
The spokesperson added that the "company has in good faith ensured they receive certain additional benefits and a generous severance.”
In March, Unacademy had let go over 100 employees from its PrepLadder team amid “restructuring” of the organization.
Unacademy is currently valued at $3.44 billion and counts global venture capital (VC) firms, including Sequoia Capital, Tiger Global Management and SoftBank, among others, as its backers.
Unacademy is not alone. In late February, Lido Learning asked over 1,200 of its employees to resign, and had said then that it was looking to wind down its operations amid a funding crunch.
The latest development also comes at a time when Unacademy has 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 Unacademy 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 then added that the company’s core business was on track to achieve profitability. According to the spokesperson, the company is "focused on becoming profitable by the end of Q4 CY2022 (fourth quarter of calendar year 2022) in our core business, while investing for growth in our group companies.”
Unacademy also launched its first experience centre in Delhi and Munjal announcing that the company is planning an omni-channel presence in the education sector in the test preparation and K-12 learning space.
Many edtech companies, especially unicorns, or startups with over $1 billion valuation, have adopted the inorganic route to expand after the demand for online learning surged post the outbreak of the Covid 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.