Immersive K-12 (kindergarten through standard 12) edtech platform Practically has laid off permanent staffers across departments, while also failing to pay salaries to many of its contractual and permanent employees over the last three to four months citing a liquidity crunch and a pending fundraise, people aware of the matter told Moneycontrol.
In an email to employees, the company said that it was facing a funds crunch at a time when many online edtech startups, especially in the K–12 space, were struggling to stay afloat as demand for online learning had dropped with offline classes and coaching centres opening up again.
“Owing to market dynamics, our next round of investors were not able to wire the much-needed growth capital. We have been facing a crunch for a few months now and the delay in salaries is primarily due to this,” said Practically in an internal email sent to employees on September 15. Moneycontrol has reviewed copies of the email.
The company also said in the email that it will restructure its business model, which will result in layoffs at Practically. “Considering all aspects, we have decided to focus on the soon-to-be profitable business lines — India B2B (business-to-business), international markets, and partnerships, and will substantially trim down the B2C (business-to-consumer) business. To align to this change, we will have to restructure the company, and this will impact teams who would be redundant after this restructuring exercise is done,” said the K-12 edtech startup.
Employees began receiving termination emails in early October, with the company citing the same reason. The number of laid-off employees could not be determined immediately. The number of employees who have not got their salaries also could not be ascertained.
In a response to queries sent by Moneycontrol, Practically said that the company is "days away from signing multi-year large B2B deals" and is in process to get a bridge round from current investors that will help the company to get things back on track and repay dues to employees.
“Like any startup, due to the extremely challenging external environment our operations have been facing headwinds. Practically’s current investors have stepped in with bridge funding to stabilise the operations and meet immediate financial commitments to employees and others, starting mid-November. Practically is fully committed to fulfilling its obligations to all stakeholders, especially to its current and past employees,” said Charu Noheria, Co-Founder and COO.
“Practically closed a $5 million term sheet in May to support growth plans and operations. Unfortunately, both investors that were part of the term sheet delayed their remittance due to the slowdown in financial markets. This led to severe cash shortage for the growing operations, forcing us to rethink the business verticals, thus impacting cash-burning operations like B2C sales and related verticals.
As a result, the headcount of the B2C business has been reduced by around 190 employees since mid-Aug 2022, in order to stabilise our operations. We have refocused our efforts on large B2B deals in domestic and international markets, introduced new product lines, and are well on our way to clock healthy sales volumes by April 2023,” Noheria added.
Founded in 2018 by Subbarao Siddabattula, Noheria, and Ilangovel Thulasimani, Practically uses interactive methods, such as AR (augmented reality), simulations, and 3D videos to teach STEM (science, technology, engineering, and mathematics) to K-12 students.
According to LinkedIn, a networking platform for professionals, and company review platforms such as Ambition box and Glassdoor, Practically's employee count ranges between 200 and 500.
While many permanent employees from Practically's educator, sales, human resource, and other departments were let go, the dues of some of its contractual educators remain unpaid.
“I have not received a single penny from them since the day I started working. Every month they give us the same excuse that we do not have funds. They say when our funds come, we will pay you. But for how long will this work?” said a contractual educator who joined the company in July 2022.
According to media reports, the company was due to announce its series B funding at the beginning of 2022, which got delayed. More recently, in response to employee queries on their remuneration, the company said it would clear a part of employees’ salaries by the end of October as it expects the funding amount to be remitted by its investors by November-end.
“We have a term sheet in place and a firm commitment from Malaysia-based investors that the funds would be remitted to the company by the end of November, by which we will be able to clear the salaries due in full. We will also try to secure funds by way of revenues, and will try our best to clear part of the salaries in October,” the company said in an email sent to employees on October 11, with details on their individual dues.
However, employees claim that they have not yet been paid by the company. As of 3 November, employees' queries have gone unanswered.
Practically has announced raising $14 million in funding to date from NB Ventures (UAE), Earlsfield Capital (UK), the Almoe Group of Companies (UAE), Ncubate Capital (the SAR group's investment arm), YourNest Venture Capital, Exfinity Ventures, and Siana Capital. In its most recent investment round of $5 million, announced in December 2021, the firm said that it intended to expand its sales verticals and consider tactical hiring in additional departments.
The immersive edtech platform acquired Fedena, a school management software platform, in March 2022 for an undisclosed sum.
Practically is the latest in a growing list of edtech startups that have laid off employees and trimmed their wage bill citing macroeconomic headwinds.
So far this year, Indian edtech firms, including some of the largest ones such as Byju’s and Unacademy, have laid off over 7,000 employees. Earlier this week, Moneycontrol had reported how Byju’s, the world’s most-valued edtech company, had sent performance notices to about 5,000 employees (about 10 percent of its staff).
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