Whalesbook
Deal Terms and Valuation
Edtech firm upGrad is reportedly nearing a deal to acquire rival Unacademy in an all-stock transaction. The proposed deal values Unacademy at roughly Rs 2,055 crore ($218 million). This is a drop of over 90% from its peak valuation of $3.4 billion in 2021, a period of high funding for edtech firms. The sharp drop reflects the tougher funding climate for edtech firms.
Binding agreements are expected within days. upGrad also plans to apply for approval from the Competition Commission of India (CCI) this week. A key attraction for upGrad is Unacademy's healthy cash reserves, estimated at Rs 900-950 crore.
Strategic Rationale and Future Leadership
After the acquisition, Unacademy co-founder Gaurav Munjal is expected to remain CEO. Munjal has highlighted AI's crucial role in the company's future growth. The deal marks consolidation in India's competitive edtech sector as companies seek scale and efficiency.
Unacademy, which started as a YouTube channel in 2010 before becoming an edtech platform in 2015, has made strategic shifts. It previously expanded into offline centers but later returned to a more capital-efficient, franchise-led model. The company has also taken steps to improve its finances, including a Rs 50 crore employee stock option buyback and exiting company-run offline centers.
Investor Landscape and Funding
Unacademy has raised substantial funding, totaling $830-$880 million from investors like Temasek, Peak XV Partners, and Elevation Capital. In comparison, upGrad has raised about $330 million and was last valued at roughly $2 billion. Notably, Temasek is a major investor in both companies.
Separately, upGrad is discussing an internal funding round of about Rs 375 crore from its current backers, including Temasek. This ongoing funding effort suggests upGrad is positioning itself for expansion and consolidation in the evolving edtech market.