Japanese investment giant SoftBank is in advanced talks to invest in online learning platform Unacademy, a move that could mint a new unicorn in India.
Masayoshi Son-led SoftBank is looking to lead an investment of $150-200 million in Unacademy, valuing the company at $1.2 billion pre-money, according to two people aware of the potential deal’s terms. They didn’t want to be named because the talks are private.
If sealed, the deal would lift Unacademy into the upper crust of India’s startup ecosystem. Unacademy’s competitor Byju’s is the only other online learning platform among India’s unicorns — startups that command a valuation of a billion dollars or more.
A SoftBank spokesperson declined to comment on what it termed “speculation”, and Unacademy did not respond to an email seeking comment.
Edtech companies such as Unacademy and Byju’s — valued at over $10 billion — have been among the few businesses that benefited from the coronavirus lockdown as schools remained shuttered and people stayed indoors.
Unacademy allows educators to create videos for courses from school level learning to college entrance exams across streams, besides for more advanced courses such as civil services exams and MBA entrance tests.
It has more than 200,000 subscribers for its paid platform Unacademy Plus, and saw revenue rise 80 percent in April.
“Investors are seeing Unacademy as the next big thing after Byju’s, and it has the potential to build a large outcome. Test preparation for competitive exams is a large market and during this pandemic, ed-tech is one of the few sectors investors can bet on,” said a person close to the company, requesting anonymity.
The deal is expected to close over the next few weeks, and although other late-stage technology funds are interested and vying for a stake, SoftBank is the frontrunner to close a deal. Unacademy’s existing investors, including venture firms Sequoia Capital, Nexus Venture Partners, Blume Ventures and Steadview Capital, may also participate in the round.
Unacademy was valued at $510 million in February this year. The company raised $110 million in February led by private equity firm General Atlantic and social media giant Facebook Inc.
Moneycontrol reported on June 5 that Unacademy is seeking a billion dollar valuation in its ongoing fundraise.
Unacademy is also looking to expand its offering by acquisitions. It acquired PrepLadder, which provides an online portal to prepare for medicine entrance exams, for $50 million last week. It is also in talks to acquire Mastree, The Morning Context reported last week. Mastree provides live math and science classes for students in classes 6-8.
For FY19, Unacademy recorded a revenue of Rs 11.6 crore on losses of Rs 90 crore, according to regulatory filings. The Times of India reported on June 5 that Unacademy has an annualised revenue run rate of $80 million.
The deal would also mark SoftBank’s first new Indian investment since it backed eyewear retailer Lenskart last year. In late 2019, SoftBank was also troubled by co-working upstart, US-based WeWork, whose IPO plans came apart amid governance issues, and SoftBank had to bail it out, install a new CEO and take a huge write-down on its investment.
SoftBank is expected to invest from its second Vision Fund. Although it is structured as a fund, its only limited partner (investor) so far is SoftBank itself. The money is from SoftBank’s balance sheet, and does not have external investors so far, unlike its $100 billion first Vision Fund.