Unacademy co-founder Gaurav Munjal clarifies ESOP conversion move for former staff amid valuation markdown

“Unacademy is under M&A discussions at a similar valuation for an all-stock deal where there will be no cash involved. This means founders and investors are not getting any cash as part of this deal,” Munjal told employees in the note.

“When liquidation preference is properly enforced, ESOPs effectively become zero. But we didn’t want that to happen,” he added, saying the board approved the ESOP exercise to ensure former staff can hold equity in the event of any deal.

What is Unacademy offering through this ESOP window?

The ESOP exercise terms notified to former employees include an extremely low exercise price of Rs 0.00042 per share, but also a caution on tax implications and the risk that equity may not yield any returns. The notice warns that exercising the shares triggers immediate tax liability under Indian law, with no assured liquidity, and highlights that investor liquidation preferences may still leave little or no payout for common shareholders.

Why is this ESOP move happening now?

Munjal’s clarification comes as the Bengaluru-based startup is negotiating a potential acquisition. Moneycontrol reported last month that Ronnie Screwvala-led UpGrad has been in talks to acquire Unacademy for about $300–$400 million in an all-stock structure. Talks have focused on consolidating Unacademy’s test-prep and postgraduate verticals with UpGrad’s portfolio in the midst of a prolonged edtech downturn.

If completed at the valuation level indicated to employees, the transaction would mark one of the sharpest markdowns for a late-stage Indian unicorn, with Unacademy having raised more than $800 million from global investors such as SoftBank, General Atlantic, Temasek, and Tiger Global.

How has leadership changed in recent months?

This comes months after Moneycontrol reported in May 2025 that Unacademy’s founders Gaurav Munjal and Roman Saini were planning to step back from day-to-day operations and spin off AirLearn as a standalone venture. At the time, the board had asked the founders to first reduce cash burn and stabilise operations before any leadership changes.

That transition has since taken shape. In September, Moneycontrol reported that co-founder Sumit Jain had been appointed CEO of Unacademy’s test-prep business, formalising the company’s shift to a new management structure. Jain, who joined Unacademy through the acquisition of his real-estate startup CommonFloor, has been leading its offline centre expansion and profitability push.

What challenges is Unacademy facing internally?

Unacademy has spent the past two years cutting costs, shrinking non-core operations, shutting verticals, and rationalising headcount after the post-pandemic edtech slowdown. Offline coaching competition has intensified, while paid online learning demand has tapered.

Munjal acknowledged the pain in his email, saying the outcome was not what the company envisioned for employees or for investors.

“This is not the outcome that we wanted, neither for investors nor for employees. As the CEO, I take full ownership, and I am sorry that this is happening,” he wrote.

How has Unacademy's business evolved?

Founded in 2015, Unacademy became one of India’s most prominent edtech unicorns during the pandemic, backed by investors such as General Atlantic, SoftBank, and Temasek.

For FY24, Unacademy reported Rs 839 crore in revenue, down about 7 percent year-on-year, while net losses narrowed by 62 percent to Rs 631 crore, according to filings.

What does this mean for former employees?

The ESOP clarification message indicates Unacademy is preparing its cap table and employee equity structure ahead of a possible sale, while attempting to provide former staff some participation in any future upside — albeit with clear warnings that equity value is uncertain and could still be wiped out.