Unacademy Faces Turbulence: Mass Layoffs and Merger Rumors Explode Amidst CEO’s Admirable Optimism

EdTech giant Unacademy has once again found itself in the spotlight, this time due to a fresh round of layoffs and swirling rumors about potential mergers or sales. The Bengaluru-based startup, last valued at $3.4 billion, has reportedly let go of approximately 250 employees, primarily from its sales, marketing, business, and product teams, according to a recent TechCrunch report.

This latest round of job cuts brings the total number of layoffs at Unacademy to around 2,000 since the company began its cost-cutting measures. While a company representative acknowledged the layoffs, they declined to specify the exact number of affected employees.

An Unacademy spokesperson explained how they have recently implemented organizational changes as part of their continued commitment to optimize operations and boost overall efficiency. They claim that this strategic realignment was essential to align with their annual objectives and long-term vision. Their primary focus remains on achieving sustainable expansion and improving financial performance.

Amidst these developments, CEO and co-founder Gaurav Munjal‘s recent comments on startup failures have garnered attention. His reply on X (formerly Twitter) to Bhavin Turakhia, founder of Zeta, has sparked speculation. Just a day before the layoffs, Munjal engaged in a discussion on social media about startups evolving into “boring” companies with sustainable profitability and established processes.

Adding to the intrigue, reports from The Morning Context suggest that Unacademy has approached multiple education companies for potential Mergers and Acquisitions. Munjal, however, took to X to dismiss these rumors, asserting the company’s strong position. He claimed that Unacademy is headed for its best year yet in terms of growth and profitability, has a significant financial runway, and is focused on long-term success.

Despite the challenges, Munjal remains optimistic about Unacademy’s future. He claims the company has Rs 1,600 crore in the bank, providing a runway of around five years with no debt. The CEO also notes that the company’s burn rate is projected to decrease to Rs 350 crore this year, down from Rs 1,400 crore two years ago.

However, Unacademy, like many in the EdTech sector, has struggled to secure fresh funding in recent times. Its last significant funding round of $440 million occurred in August 2021. The company has also seen several top-level changes, including the recent transition of co-founder Hemesh Singh from his role as Chief Technology Officer to an advisory position. Financially, Unacademy reported a loss of Rs 1,678.1 crore in FY23, an improvement from the Rs 2,847.9 crore loss in FY22. The company’s operating revenue increased to Rs 907 crore in FY23, up from Rs 719.2 crore in the previous fiscal year.

Unacademy had started laying off company employees after they underwent fund shortage in the year 2022. The company has been aggressive in its actions, bolstered by support from multiple investors including Facebook, General Atlantic, Peak XV (formerly Sequoia), and Softbank. Nevertheless, the company has successfully raised approximately Rs 6,400 crore in multiple funding rounds.

As Unacademy navigates these turbulent waters, the EdTech industry at large continues to face challenges. With major players like BYJU’S also grappling with financial difficulties, the sector appears to be in a state of flux, potentially heading towards significant consolidation in the coming years.

The company’s journey from a high-flying unicorn to its current state of restructuring and optimization serves as a cautionary tale for startups riding the waves of rapid growth. Yet, it also highlights the resilience and adaptability required in the fast-paced Tech industry. As the dust settles on this latest round of layoffs and speculation, all eyes will be on Unacademy to see if it can deliver on Munjal’s promise of a record year. The coming months will be crucial in determining whether the company can successfully pivot towards sustainable growth and profitability, potentially setting a new blueprint for success in the evolving EdTech landscape.

For now, Unacademy’s story remains a compelling chapter in the ongoing saga of India’s startup ecosystem, with lessons for entrepreneurs, investors, and industry watchers alike.