The edtech company is now worth less than $500 million, Unacademy’s co-founder and CEO said. The edtech company is eXploring merger and acquisition options as its investment talks brought it valuations of up to $3.5 billion. The brutal appraisal, which was included in a public note on X, underscores how blindingly fast India’s online education boom unraveled as students have flocked back to physical classrooms and competition over pricing has escalated.
Founder Confirms Massive Reset And Deal Scouting
Munjal conceded that Unacademy had erred in gauging the normalization after the pandemic and lost share in some of the categories that it earlier dominated. He said the board and management team have been looking at strategic combinations, acknowledging that M&A is in play. Unacademy has been linked with potential acquirers in complementary education segments as market talk points to discussions of an acquisition by upGrad for up to $400 million.
Despite the swooning valuation, as management tells it, it’s now following a leaner operating model. The company has cut its annual cash burn to less than ₹1.75 billion (about $19.5 million) by slashing headcount, curbing marketing and refocusing on core subscription offerings, Munjal said — down from about ₹14 billion ($155.7 million) in 2022.
From Hypertrophy to Hard Reset in India’s Edtech
Unacademy was one of the biggest beneficiaries in a surge in digital learning that took place during lockdowns, raising about $854 million across 13 rounds, PitchBook data shows, from investors like SoftBank, Tiger Global Management, General Atlantic and Peak XV Partners. That momentum then turned in reverse as offline test-prep and coaching centers reopened, and rivals undercut pricing with roughly similar content and distribution.
The larger sector has been brutal. Tracxn and other sources of venture data have reported a steep drop-off in edtech deal-making and late-stage funding from 2021. The contrast within the category could not have been starker: Byju’s, India’s most valuable startup, has been burdened by a combination of financial and legal pressures; Physics Wallah had always positioned itself as an underdog and it reported breaking even in profits during its strong stock market listing.
What A Price Tag Of Less Than $500M Signifies
A sub-$500 million valuation is an 85%-plus drawdown from Unacademy’s apex, and practically resets expectations for late-stage Indian edtech. It also poses prickly cap-table questions. Most large growth rounds include liquidation preferences that put recent investors on top in the event of a sale. In cases where enterprise value deleverages, common shareholders and employees rarely receive any meaningful proceeds. Though terms for Unacademy’s investors are private, the prevailing norms of the sector point to an uphill distribution unless buyers price in meaningful strategic value.
On the operating side, Unacademy has meaningful cost work ahead. Cutting annual burn down by approximately ₹12.25 billion in two years is a significant shift from blitzscaling to discipline. The trade-off is slower growth and a focus on fewer products — an adjustment many more startups across India’s consumer internet landscape have made during the funding boom years.
Potential Buyers and Strategic Fit for Unacademy
To potential acquirers, Unacademy has brand equity in test prep, a huge historical learner base and content assets that can be cross-sold. A buyer like upGrad, which has a focus on upskilling and higher education, might also tap Unacademy’s funnel to get the attention of aspirants closer to the onset of their journey in order to enhance lifetime value. Other potential acquirers could be offline coaching networks looking for digital distribution or international platforms eyeing a share in India’s exam-prep market.
The price will depend on how many people sustain their subscriptions, how many instructors stick around and what the outcomes are for each group of students (and depends heavily on churn). In today’s market, buyers are looking at contribution margins, not just top-line scale. If Unacademy can show stable cohorts post-price realignments and lower marketing intensity, it only buttresses the argument for a strategic premium.
Edtech’s New Reality in India: Hybrid and Value Focus
The edtech reset is evidence of a simple consumer truth: when offline options return and household budgets tighten, value and outcomes prevail. Companies that responded with pricing, blended delivery online and in physical spaces, and kept a tight rein on acquisition costs appear to be doing better. Hybrid models — combining local sites for doubt-solving and proctored practice, while keeping delivery of content online — have taken share from purely online courses, industry analysts say.
For founders and investors, Unacademy’s reckoning is a cautionary tale about becoming too dependent on transient demand spikes and paid growth. It also demonstrates that aggressive cost corrections can push out runway and generate optionality — even if the valuation reset is painful. Through a sale or sustained independence, the next chapter for the company will be one centered on discipline, pricing innovation and provable learner outcomes instead of headline growth.
What to Watch Next for Unacademy and Indian Edtech
Some key signals to watch for are the trend in subscription renewals, any growth and consolidation of offline partnerships and clearer visibility on the M&A process. A done deal at or around that rumored price would establish a new benchmark for late-stage India’s edtech assets. If Unacademy decides to go it alone, keeping the burn rate in check and presenting credible evidence of organic growth will set the pace at which it can regain investors’ trust.
