SoftBank-backed Unacademy has laid off another 150 employees as the edtech unicorn looks to cut costs amid a worsening funding winter for India’s startups and a dip in demand with the Covid-19 situation normalising.
The employees who have been sacked account for about 2.6 percent of Unacademy’s workforce and were from the firm's PrepLadder team, a source familiar with the matter said. A few of the sales team staff were also asked to go, the source said.
Unacademy, India’s second most valued edtech company after Byju’s, acquired PrepLadder in July 2020 for $50 million. PrepLadder is an online platform for medical entrance exam preparation, providing course material and mock tests.
Inc42 first reported the development, saying 150 employees from PrepLadder and sales and operations teams were asked to go and offered two months severance package along with medical insurance.
"Based on the outcome of the recent appraisal, a very small fraction of the workforce (~2.6 percent) was put on a performance improvement program (PIP), as is common for any organisation of our size and scale. The departure of these employees is a result of the PIP, which is a standard practice in all organisations," a spokesperson for Unacademy said, adding that the company "strongly denies conducting layoffs."
As reported by Moneycontrol, earlier this year, Unacademy had laid off around 600 employees or 10 percent of its workforce to cut the company’s rising cash burn.
For FY21, Unacademy’s net loss widened six times to Rs 1,537 crore even as its revenue grew fourfold to Rs 464 crore from the previous year. The company’s expenses for the year rose to over Rs 2,000 crore from Rs 452 crore a year earlier.
In May, Unacademy co-founder and chief executive Gaurav Munjal told employees to learn to work under constraints, saying the funding winter was here.
“We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months,” Munjal said on May 26. “This is a test for all of us. We must learn to work under constraint.”
“We have a different Iconic Goal this time. The Goal is of Profitability. The Goal is of generating FCF (free cash flow),” he said.
The layoffs come at a time when edtech companies are struggling with falling demand for technology-based education services as Covid restrictions ease and students return to classrooms, coupled with a sharp slowdown in funding for startups.
Moneycontrol has written how edtech companies are resorting to cutting advertising and marketing costs, streamlining verticals and mass layoffs to prepare a runway for the near term. According to Moneycontrol estimates, edtech companies have laid off close to 4,000 employees in 2022.
Founded in 2015 by Munjal, Roman Saini and Hemesh Kumar Singh, Unacademy offers multi-disciplinary learning and test preparation solutions. The company counts Nexus Venture Partners, Sequoia Capital, Facebook and Blume Ventures among its backers.
In May, the company forayed into offline teaching and last week, it announced opening of a tuition centre in Kota to take on coaching institutes including Allen, which recently raised $600 million from James Murdoch’s Bodhi Tree Systems.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
