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Saudi edtech Noon shuts India classes, holds back teacher salaries amid fund crunch

The company promised to pay educators’ salaries in February, after a delay of over eight months, with a bonus to compensate. However, many former teachers have still not received any compensation and Noon has asked for more time to clear the dues.

Mumbai/Bengaluru / March 15, 2023 / 11:15 AM IST
Noon Academy

Noon Academy

Noon Academy is said to have laid off staff across roles in India after discontinuing classes and holding back teachers’ salaries for over eight months in what seems to be another case of an edtech startup facing a slowdown in demand and a funding dry-out.

The Saudi Arabian startup, which first said it would clear the dues by February, asked for an extension on the payments, saying it was waiting to close an ongoing funding round to clear the salary dues.

“Unfortunately, we are facing some delay in closing the upcoming funding round which we initially anticipated to happen in Jan 2023. We are now hopeful that we will close the next round of funding by May 2023 as we have strong commitments from our investors,” Noon Academy said in an email to staff dated March 14, which Moneycontrol reviewed.

The company said it plans to pay part of the dues by the end of March and disburse the remaining amount by the end of May.

Tough times

Edtech startups, especially in the K-12 space, are struggling to stay afloat because investor funding is drying up and demand for online learning has dropped with the resumption of offline classes and the opening up of coaching centres after pandemic restrictions were lifted. Since 2022, edtech firms, including biggies Byju’s and Unacademy, have laid off over 8,000 Indian employees.

Noon Academy, which entered India in 2019, is said to have started letting go of 40 contractual teachers in July 2022, months before their agreements were scheduled to lapse. The company eventually laid off the majority of its permanent staff by the end of February, people aware of the matter said.
While permanent employees, including those in the sales, tech, and operations teams, are said to have been paid in full after being asked to leave, the company has not paid its contractual teachers for seven to eight months.

Noon Academy’s India team, based in Bengaluru, had a strength of about 100 employees, according to Glassdoor and LinkedIn. However, it’s not clear if the figure includes contractual employees.

“Since July-August last year, the company staff kept reassuring us that we will be paid in full. Now they have also been asked to leave, the only difference being they moved on with their compensation and we are stranded without it,” said a former educator, requesting anonymity.

“There are teachers whose payments have been held off since May. There’s a senior educator who has a payment of about Rs 23 lakh due. My own payment of about Rs 2 lakh is due. I spoke to two other teachers who haven’t been paid about Rs 5 lakh each,” the educator added.

After delaying teachers’ salaries till November 2022, the company promised to make the payments in February with a bonus amount to compensate for the hold-up, Noon Academy said in an official mail, which Moneycontrol reviewed.

In the email, Noon Academy cited a fund crunch for the measures it had taken recently and said that the past few months had been tough company-wide as they had their “hands tied and resources squeezed.”

Also Read: Layoffs, restructuring, slowdown: India’s edtech firms are struggling post-pandemic

“To make this up to you and in an attempt to help as much as possible we will be adding a bonus (payment) as a gesture of goodwill. We will however have to postpone disbursement until Feb 2023 in anticipation of the closing of our ongoing fundraising round,” the company said in the mail. “We have not been able to fulfill our commitment to you in due time. We acknowledge that we did not handle the communication the past few months properly, and for that, we apologise.”

However, more than four former educators confirmed they have still not received any compensation from Noon Academy 15 days into March.
Queries sent to Noon Academy did not elicit a response at the time of publishing.

Social learning

Founded in 2013 by Mohammed Aldhalaan and Aziz Alsaeed, Noon Academy started as a test preparation platform for students in Saudi Arabia. Now, the company calls itself a social learning platform and enables students to attend virtual classes, on-demand tutorials, and live study group sessions.

The company has raised $21.6 million in over three funding rounds, according to Crunchbase. Its backers include venture capital firm 500 Global, which has invested in Indian unicorn Cars 24 and other edtech companies such as Canada-based foreign education consultancy firm Applyboard, and the US-based coding platform for kids, Tynker.

After raising Series A funding of $8.6 million in June 2019, co-led by Central Asia-based VC firms Raed Ventures and STV, the company entered India to strengthen its product and build tech infrastructure to support it.

While Noon Academy claims to be present in over eight countries including India, its website and application currently show it operates only in four countries – Saudi Arabia, Egypt, Iraq, and Pakistan. Former educators confirmed that India was among the options earlier.

Mulling India exit

A former teacher said on condition of anonymity that after sacking all educators last year, the company discontinued classes abruptly on November 16.

“Students suffered a great loss. They discontinued the classes when their exams were right around the corner. While some have been paid their refunds, I still get messages and calls from others who are struggling to get their money back,” the teacher said. Moneycontrol has reviewed screenshots of such messages.

According to its website, Noon Academy caters to over 12 million students globally.

The company offered courses for standards 11 and 12, in addition to test prep courses for competitive exams such as the National Eligibility-cum-Entrance Test for admission to undergraduate medical courses. However, currently, Noon Academy does not have live courses on its platforms for Indian students.

Former employees allege the company is mulling an exit from India, shutting down its entire operations in the country.

“With most of its staff being let go, we are left with no point of contact with the company. The one employee who is still working there is also said to be leaving the company by the end of this week,” said another former employee on condition of anonymity.

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Mansi Verma
Mansi Verma