Edition #11. Unacademy just lost another chance at redemption.
Ronnie Screwvala’s UpGrad has pulled out of talks to acquire the troubled edtech. Screwvala confirmed the development to multiple news outlets, citing differences on valuation. UpGrad, according to reports, had offered Unacademy’s investors a share swap deal that valued the latter at $300-400 million. At its peak, in 2021, Unacademy was valued at $3.4 billion.
After hitting dizzying heights, in investor interest and valuations, for a brief while – largely riding on Covid-19 tailwinds – edtech has taken a severe beating in the last 18-odd months. Mega dollars bet on promising founders have gone up in smoke.
Unacademy raised $880 million (source: Tracxn) over its lifetime from investors such as SoftBank, Temasek, Tiger Global, Sequoia Capital and Peak XV Partners. Rival Byju’s raised over $4 billion (source: Tracxn) and was valued at $22 billion before it crashed and burned. Investors left in the lurch include Peak XV, General Atlantic, Qatar Investment Authority, Lightspeed Venture Partners and Prosus, among several more.
What’s next for edtech?
Away from the Baiju’s and Unacademy debacles, there’s actually a whole lot still going on in edtech.
After becoming the first homegrown edtech to list on the bourses last year, PhysicsWallah is betting on an omnichannel play – offline learning centres and an OTT platform called Pi – to drive growth up ahead. Eruditus, which counts SoftBank and Accel among its backers, and Temasek backed UpGrad stay focused on the executive education segment and are lining up for IPOs in the foreseeable future.
Funding for the sector saw a small surge last year, largely on the back of AI-led business models emerging in the market. English learning startup SpeakX.ai raised $16 million from WestBridge Capital and others. Seekho, which offers micro digital learning content, raised $28 million led by Bessemer Venture Partners.
Despite the upheavals in the sector, edtech is one of those inevitable opportunities from a venture capital standpoint.
The business models continue to evolve and the current AI-led wave will undoubtedly also serve up some lemons. But, edtech isn’t going away even though recovery may be slow. “I think AI could finally solve the things that have been very hard to solve (in edtech) – engagement, retention and monetisation. It’s my number one theme, personally,” Antler partner Nitin Sharma told me recently.
Watch: Antler’s Nitin Sharma on Day-Zero Investing
Venture capitalists are eternal optimists. That optimism will be useful in fuelling the next wave of edtech investing in the country. This time, hopefully, with fewer fatalities in its wake.
Exit Files: Peak XV, Premji Invest, TPG NewQuest, Arali Ventures
1. Peak XV looks poised to score another profitable exit via a secondary stake sale in Sirion, a AI-native contract lifecycle management software firm. Haveli Investments, a US-based technology investment firm, is acquiring a majority stake in Sirion, the company said in a statement without disclosing the terms of the deal.
Reuters reported that Haveli is expected to buy up to 90% of Sirion in a deal that values that company at around $1 billion. Peak XV (then Sequoia Capital India) first invested in the Gurgaon-born company in 2014, leading a $4.7 million Series A round.
2. Premji Invest and TPG NewQuest have booked partial exits from ready-to-cook food maker iD Fresh Food in a secondary transaction.
The two investors sold stakes to Apax Partners for an undisclosed sum. Mint reported earlier that the Bangalore-based company was in talks to sell a 30% stake in a deal that would value it at Rs 4,000-4,500 crore. For Apax, which has been investing in India since 2006, the deal, according to reports, represents its first bet in the country’s consumer sector.
3. Arali Ventures, a seed stage focused venture capital firm, has scored another quick exit from its Fund I portfolio. It sold its stake in US-based HBOX Inc, a digital healthcare startup, generating a 23x return within four years of its investment, the firm said in a statement. HBOX raised an undisclosed sum in a growth round from the Charlesbank Technology Opportunities Fund.
The exit marks Arali’s fourth from Fund I after FinBox (partial exit), Wingman and Insent, enabling the firm to return more than “2X of the fund within six years,” the statement said.
Quickly before we go
Andreessen Horowitz has raised $15 billion+ across multiple funds, including $6.75 billion for growth investments and $3 billion for “other venture strategies,” co-founder and general partner Ben Horowitz said in a post on the firm’s website.
On the firm’s broader mandate, Horowitz wrote, “Our mission is ensuring that America wins the next 100 years of technology… The technology landscape that we will be investing into is dynamic, innovative, and intensely competitive with China.”
Have a good week ahead.
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