Unacademy, one of India’s high-profile startups, has urged its employees to learn to work under constraints and focus on achieving profitability, as the SoftBank and Tiger Global-backed online learning platform predicts a funding dry spell. throughout the industry for as long as 18 months.
The online learning platform, which has raised more than $800 million and was last valued at $3.44 billion in its most recent funding round in August, “always raised more money than was needed” to “experiment and make continually grow our platform without worrying about when it will run out of money,” co-founder and CEO Gaurav Munjal wrote in an email to staff on Wednesday.
“[…] But now we must change our ways,” he wrote in the email, the content of which was obtained and reviewed by TechCrunch. “Winter is here.” Munjal said he expects funding shortages for 12 to 18 months.
“Some people predict that this could last 24 months. We must adapt. This is a test for all of us. We must learn to work under pressure. We must focus on profitability at all costs,” he wrote in the email, titled “A Different Iconic Target This Time.” “We must survive the winter,” he added. Investors around the world have sounded alarm bells in recent weeks, urging portfolio founders to plan for the “worst” amid a sharp reversal in tech stocks after a 13-year bull run.
Last week, Y Combinator advised its startups to raise additional capital if they can to ensure they have a roughly two-year runway, TechCrunch first reported. Sequoia and Lightspeed have offered similar suggestions. Dozens of startups, many of which raised capital at peak 2021 valuations, are currently struggling to raise new rounds as investors grow increasingly cautious and good extensive due diligence returns. Several venture capitalists who were in advanced stages of talks to back startups, at different stages, a few weeks ago are renegotiating prices.
Edtech startups in India, and many other markets, are grappling with additional challenges as schools and other institutions reopen and reverse some of the rapidly and widely adopted online platforms witnessed during the pandemic. Unacademy, Vedantu and Lido, three startups operating in the space in India, have cut their workforce in recent months to eliminate layoffs and improve their financial performance.
Byju’s, India’s largest edtech, had been trying to go public via the SPAC route since last month and was seeking a valuation of more than $40bn, but has since postponed plans following the market crash, according to a source familiar with the matter. Munjal emphasized in the email that Unacademy’s new goal is to achieve profitability and generate free cash flow.
In recent months, Unacademy has taken steps, such as closing the K-12 offering and liquidating some inorganic areas into which it had expanded after acquisitions, to reduce costs and risk exposure. He outlined several other steps the firm is taking:
We have significantly reduced our brand marketing budget. Instead, we will focus on organic growth channels. Every test prep category we run needs to become profitable within the next 3 months. Unacademy centers should be profitable in FY23. Be Extremely Aware of Burn and Reduce It Significantly All incentives for educators that are not tied to revenue have been completely eliminated or are in the process of being eliminated completely. Travel only if absolutely necessary. Meetings that save travel costs and can happen on Zoom should happen on Zoom
“We can only achieve this iconic goal if each of us is working towards it,” he added.
Gaurav Munjal, founder and CEO of Unacademy, a high-profile Indian startup, urged employees that they “must learn to work under constraints” and “focus on profitability at all costs” in a heartfelt email. pic.twitter.com/V0USqx3PZE—Manish Singh (@refsrc) May 26, 2022