Exclusive | SoftBank-backed Unacademy spent Rs 100 crore to poach 30 teachers in Kota

SoftBank-backed edtech unicorn Unacademy has spent as much as Rs 100 crore over the last two months to poach 30 top educators from India's coaching hub Kota, sources said, as it wages a bruising battle for market share against incumbent Allen Institute.

The Gaurav Munjal-led edtech firm, which opened its first offline coaching institute in Kota last month, has signed 2-2.5 year contracts with these educators, sources said. The total amount spent on signing these contracts has crossed the Rs 100-crore mark, signifying its intent to pay top dollar to poach talent. Most of these educators were from Kota's biggest educational institute Allen Career Institute.

"Unacademy has generated a revenue of nearly Rs 3 crore in the first 15 days through student subscriptions at Kota," said a source quoted above requesting anonymity. "And it is on track to get a revenue of Rs 10 crore in the first month," the source added.

Queries sent to Unacademy and Allen remained unanswered.

Unacademy's aggressive offline expansion plans come at a time when demand for online education is moderating in the country after two consecutive years of hypergrowth.

Slowing demand for online edtech solutions, coupled with a drop in funding has forced edtech companies to lay off thousands of employees, go slow on expansion, reduce advertising and marketing spends. So far in 2022, Unacademy has fired over 750 employees, including educators in a bid to cut costs.

Munjal, in a letter to employees in May, had said that they should learn to work under constraints. "Winter is here," Munjal had said. The company will look to focus on profitability 'at all costs', he had added.

However, it is doubling down on its offline expansion plans. The company is looking to now open another physical coaching center in Kota. It has so far poached about 40 faculty members from Kota's top incumbent education institutes, mostly from Allen.

Following this, Allen had sued 20 of its former educators for alleged breach of employee agreements, Moneycontrol had reported earlier in the day. The company, in the last week of June,  had filed cases under Section 34 of the Arbitration and Conciliation Act in the Jaipur Commercial Court, alleging a breach of contract as the educators did not serve a notice period after tendering resignations, sources told Moneycontrol.

Demand for educators in Kota is rising fast even as top teachers are getting laid off by edtech companies elsewhere in the country, as students are coming back to the $500-million education hub with the pandemic receding.

For new-age edtech companies like Unacademy, making forays into the offline segment, Kota holds significant importance as it has been an offline education hub, especially for engineering and medical test preparations, for decades.

"If you do well in Kota, you will do well in most cities," said a source, closely associated with Unacademy's top management.

Kota is thus becoming a battleground for education companies and with new-age edtech firms entering the town, incumbent coaching centers like Allen are fearing losing market shares.

Moneycontrol had reported how educators poached by Unacademy from Allen were getting direct and indirect threats from Allen. Unacademy had also sought police protection for its educators and employees.

In a video shared with employees on June 10, Brajesh Maheshwari, one of the four founders of Allen, warned educators who left recently that they would be blacklisted.

“Aaj se sharafat ki duniya khatam, jaisi duniya waise hum (from today, the world of decency ends, we will behave the way the world behaves,” he said.

The focus on offline coaching centres isn’t limited to Kota. As the pandemic recedes, demand for online learning offered by startups has also eased, prompting their ventures into offline coaching. Unacademy has said that it has plans to open 15 physical coaching centers across nine cities.

The fight for a larger share in the offline education space comes as demand for online and remote educational services is falling, thanks to the pandemic situation normalising in most parts of the country. Moneycontrol had reported how India’s edtech companies were struggling after the pandemic.