In 2022, SoftBank-backed Unacademy made headlines for poaching star teachers from competitors for its first offline coaching institute in Kota, India’s largest test preparation hub.
The edtech unicorn, currently India’s second-most-valued startup, spent almost Rs 100 crore to poach about 30 star educators at unheard-of packages, Moneycontrol reported exclusively.
Eight months later, a lot has changed for edtech startups, with almost all of them cutting spending drastically as demand slows for online learning and venture capital dries up. However, aggressive poaching seems to be continuing.
WestBridge Capital-backed Adda247 has taken it to the next level. The company, which also counts Google on its cap table, allegedly spent as much as Rs 100 crore to poach five teachers from PhysicsWallah, another WestBridge Capital-backed company, to start a platform on YouTube called Sankalp, people familiar with the matter told Moneycontrol.
Strategic move
The five teachers – academic directors Aditya Anand and Manish Dubey, NEET-category head Tarun Kumar, chemistry head Sarvesh Dixit and mathematics professor Siddhartha Misra – left the Alakh Pandey-led company and started the YouTube channel on March 3. They declined to talk to Moneycontrol.
This comes after PhysicsWallah bought the government job preparation platform PrepOnline in October 2022 to enter the segment, which was Adda247's core business.
“Several of our educators have been approached by this splinter group, being offered crores/millions to sway them into jumping ship. Even these educators were our top-paid ones, but greed sees no limit and other edtech players know this and so have jumped into offering unsustainable and destabilising levels of salaries to compete with us,” said Abhishek Mishra, chief strategy officer of PhysicsWallah.
Although there hasn’t been any official communication about the launch of Sankalp, the people said Adda247, which raised its latest funding round of $35 million in October last year, started the channel to help students prepare online for medical and engineering entrance tests.
“If Adda247 launched the platform under its name, it would have received a lot of backlash from students for poaching star teachers at such aggressive packages from other platforms,” said one of the people quoted. “In 2020, when Unacademy poached a teacher from PhysicsWallah, it received a lot of backlash from students and so Adda247 is opting for such a strategy. Once the dust settles, Adda247 will claim Sankalp.”
Adda247’s legal registered entity, Metis Eduventures, agreed to make cash transfers of Rs 1.5 crore as joining bonuses to these educators this month, while their annual packages were agreed at Rs 5 crore, the people said, requesting anonymity. These teachers signed a multi-year contract of as much as Rs 20 crore, the people added.
“The problem with inflating packages is that it’s unhealthy for the overall ecosystem as such strategies are not sustainable and more importantly shift the focus on money from education,” the person quoted above said.
Sankalp has 336,000 subscribers and almost 9.5 million views across seven videos. However, only two of the videos are educational. The others are of the teachers explaining why they left PhysicsWallah.
Allegations and claims
“There is no policy in PW (PhysicsWallah) that restricts educators from switching organisations. But joining a separate organisation and pretending and presenting as if there is something entrepreneurial being done because of some alleged vision-misalignment at PW and trying to defame PW is a facade and a new-age marketing and brand positioning tactic,” said Mishra.
These teachers also sought the support of students after a viral YouTube video put out by PhysicsWallah’s chemistry professor Pankaj Sijariya who alleged these teachers took ‘bribes’ of as much as Rs 5 crore. Moneycontrol could not independently verify these claims. The teachers also alleged that the quality of PW's courses deteriorated after the company made multiple forays into other segments.
In the video with about 2.3 million views – the maximum number – the five teachers broke down, yelled, and were visibly upset over the allegations. They said the bribe allegations against them were completely baseless and they quit PhysicsWallah because its atmosphere was no longer conducive to learning or teaching.
“It is disheartening to see how educators… have now resorted to jeopardising the brand and its honesty. All this emotional drama in a ‘recorded video’ is a concerted and highly insincere attempt to turn the sentiments of the students in their favour,” added Mishra. “These YT (YouTube) videos are a concerted and desperate go-to-market strategy of these guys. But people should understand that these tactics affect the overall impression of parents and students around online education.”
Questions sent to Adda247 and its founder Anil Nagar remained unanswered despite several reminders.
In demand
Teachers for entrance exams to medical and engineering courses have always been in huge demand. These teachers, especially those who are well known, have annual packages of crores of rupees.
In a special series titled Notes from Kota, Moneycontrol reported how teachers were getting fat hikes last year after physical tuition centres reopened in the town after almost two years with the pandemic receding.
Founded in 2016 by Nagar, Anupam Jindal, and Saurabh Bansal, Adda247 is an online platform that helps students prepare for medical and engineering course entrance exams conducted by the government. Its potential entry into medical-engineering test preparation came as the segment struggled with the reopening of schools, colleges, and physical tuition centres over the past 12 months.
Some of the larger entities in the sector including SoftBank-backed Unacademy, Tiger Global-backed Vedantu, and Byju’s have recorded slower growth and even a revenue drop for a few months in the recent past.
Adda247 raised $64.3 million across six funding rounds and, according to Tracxn Technologies, the company was last valued at $170 million post-money in October 2022. In FY22, the company registered revenue from operations of Rs 61.5 crore and a net loss of Rs 157.9 crore. The biggest expense (Rs 129.7 crore) was finance costs, unlike other edtech companies, which spend the most on employees.
PhysicsWallah, on the other hand, is seeking to raise at least $250 million at a valuation of $3.3 billion, Moneycontrol reported exclusively last week. The company, founded by YouTube teacher Alakh Pandey and second-time entrepreneur Prateek Maheshwari, grabbed the headlines last year, when it reported a profit of almost Rs 100 crore, becoming the only profitable edtech unicorn, and one of the biggest profit-making unicorns in FY22.
PhysicsWallah raised $100 million from WestBridge Capital and GSV Ventures at a valuation of $1.1 billion in June last year.
Also Read: SoftBank-backed Unacademy explores merger with Byju’s-owned Aakash
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