Indian edtech startup Unacademy has been acquired by rival upGrad in an all-stock deal valuing the company at approximately $206 million, a 94% drop from its $3.44 billion peak valuation in 2021, the companies confirmed Monday.
The transaction, valued at ₹19.55 billion (about $206 million), was announced in March and has now closed, nearly six months later. Unacademy shareholders are receiving upGrad shares as part of the deal, while angel investors were cashed out at closing, according to upGrad co-founder and chairperson Ronnie Screwvala.
Unacademy co-founder and CEO Gaurav Munjal acknowledged the stark reversal in a post on X. “We raised at a peak, but sold at a fraction of that,” he wrote. “I’m not going to dress these facts up.”
The deal comes despite the Bengaluru-based startup holding about ₹9 billion (roughly $94.8 million) in the bank and generating annual revenue of approximately ₹4 billion (around $42.13 million), Munjal wrote. He said most of the startup’s businesses were profitable or close to profitability, and that the company had the option to continue operating independently. “Nobody was forcing this,” he added.
Founded in 2015, Unacademy spent heavily in 2020 and 2021 during the pandemic-driven online learning boom, battling rivals such as Byju’s. When demand collapsed after classes reopened, the startup cut costs, laid off employees, and restructured. It eventually brought most of its businesses to near-profitability.
However, Unacademy’s leadership believed that reaching the scale required for an eventual public listing would mean expanding into more areas of education, according to sources familiar with the matter. Joining upGrad, which has a larger presence in offline education, offered a path to that goal.
The acquisition also includes Airlearn, Unacademy’s language-learning app, which serves 10 million users across over 150 countries. Screwvala wrote on X that the app is “a great example of what is possible when the thinking, product and ambition are not limited by geography.” UpGrad said it is “very excited and positive” about Airlearn, but within about six months the two parties will decide whether to continue building the roughly 25-person business internally or raise external capital.
Unacademy, backed by SoftBank, Tiger Global, General Atlantic and other global investors, was valued at $3.44 billion in a $440 million fundraise in August 2021. The steep decline in valuation reflects the broader downturn in India’s edtech sector, which soared during the pandemic and then contracted sharply as physical learning resumed.
Analysis
Why This Matters
- Signals the end of the pandemic-era edtech boom: Unacademy's acquisition at a 94% discount from its peak shows how drastically investor sentiment has shifted for Indian edtech companies that expanded aggressively during COVID-19 lockdowns.
- Consolidation trend accelerates: The deal is one of the largest in a wave of mergers and acquisitions reshaping India's fragmented online education market, as startups seek scale and profitability.
- Impact on employees and investors: Existing shareholders are receiving upGrad shares rather than cash, while angel investors were cashed out. The terms signal that late-stage investors like SoftBank and Tiger Global are taking a significant haircut.
Background
Unacademy, founded in 2015, became one of India's most valuable edtech startups during the pandemic, raising $440 million in August 2021 at a $3.44 billion valuation. The company spent heavily on marketing and hiring to compete with rivals such as Byju's. When physical classes reopened and demand for online learning plummeted, Unacademy cut costs, laid off employees, and restructured its operations. Despite achieving near-profitability in most of its businesses, the company's leadership concluded that reaching the scale needed for an IPO would require expanding into more areas of education — a path that joining upGrad, with its stronger offline presence, could provide.
Key Perspectives
Unacademy leadership (Gaurav Munjal): The decision to sell was voluntary, not forced. Munjal wrote that the company had cash reserves and was nearly profitable, but the leadership chose to join upGrad to achieve the scale required for a public listing. “We raised at a peak, but sold at a fraction of that,” he acknowledged.
upGrad (Ronnie Screwvala): The acquirer sees value in Unacademy's assets, particularly the language-learning app Airlearn, which Screwvala described as a product demonstrating “India to the world” potential. The all-stock structure allows upGrad to combine its offline education presence with Unacademy's digital reach.
Critics/Skeptics: The 94% drop in valuation from peak highlights the risks of overvaluation in the 2021 venture capital market. While Unacademy was profitable or near-profitable, the sale price suggests that the market no longer rewarded its standalone growth prospects. The all-stock deal means Unacademy's investors are now tied to upGrad's performance, which may face similar challenges in a consolidating market.
What to Watch
- Airlearn's fate: The decision within six months on whether to keep the language-learning app under upGrad or spin it out with external capital will test the strategic rationale for the deal.
- upGrad's integration execution: How smoothly upGrad combines Unacademy's digital operations with its offline presence will determine whether the combined entity can achieve the scale needed for a potential IPO.
- Byju's trajectory: As Unacademy's main rival, Byju's continues to face its own financial and legal challenges. The consolidation of Unacademy into upGrad could reshape competitive dynamics in Indian edtech.