People chase funding headlines, but forget content and impact: Alakh Pandey, Physics Wallah

PhysicsWallah's co-founders Prateek Maheshwari and Alakh Pandey

Alakh Pandey, founder and CEO of edtech unicorn Physics Wallah (PW), believes that the biggest mistake many failed edtech ventures make is losing sight of their core offering: content.

"Everyone's talking about profits or funding, but no one focuses on what really matters—content and impact. If you get that right, everything else follows," Pandey emphasises while  passionately recounting stories of students from the remote corners of Kashmir and Bihar who defied the odds and cracked competitive exams.

At a time when several edtech companies have faltered, post-pandemic, due to the changing market conditions, PW has emerged as an outlier, securing $210 million in the latest funding round, pushing its valuation to $2.8 billion—a significant jump from $1.1 billion.

Co-founder Prateek Maheshwari shares that the company didn’t even seek this round; the interest came inbound.

“We still have Rs 1,200 crore in our treasury and will deploy capital wisely," he says, seated alongside Pandey during an exclusive interview with Moneycontrol.

While the dip in profit for FY23 and FY24 due to increased spending on growth might have raised eyebrows, the co-founders says it’s a calculated step towards seizing a larger market share, with the expectation of achieving the highest absolute profit in FY25.

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Edited Excerpts:

Tell us how you plan to deploy the fresh capital raised

Prateek: Honestly, we didn’t actively chase investors for this round; there were some inbound interest. We are sitting on a Rs 1,200-crore treasury, and for innovation or building from ground up, we need capital. There is no specific use for the fresh capital at the moment. We’re not targeting any particular acquisition right now. The company has grown significantly since our first fundraise, and a larger treasury gives us more comfort. We’ll determine the capital deployment with time.

So, you mean you’ll consider inorganic growth opportunities as they arise, but you’re not actively seeking them...

Prateek: Yes, that’s correct.

Are there any specific type of consolidation deals you’re looking at that would complement PW at this point of time?

Prateek: None of the existing edtech companies complement us because their DNA is very different. What complements us are deep-content companies, particularly those with a long-standing history of content development or a good publication house.

Alakh: Also, someone coming from a different geography, like from South. That is a place where we cannot actually relate with the students. These should align with our philosophy of building a community and have the same brand love that PW has. I agree with Prateek, none of the existing edtechs align with us or vice-versa.

We’re looking at small mergers—smaller organisations, growing like how PW did four years ago, like someone building a community on YouTube, particularly teachers themselves, with strong content.

What about Vidyapeeth? How much part-capital do you plan to pump into offline expansion?

Alakh: No, this capital isn’t required for Vidyapeeth expansion. It’s a self-sustaining engine. We already have Rs 1,200 crore in the bank, which will be utilised. We spend about Rs 70-80 crore annually on Vidyapeeth expansion, which is already covered. Vidyapeeth doesn’t need more money, it needs discipline and academic focus.

Prateek: Just to add, Vidyapeeth is now generating cash and has turned profitable.

Alakh: Out of our 11 offline regions, eight are profitable. One is nearly breakeven, and two are still in losses, which we plan to cover. Our offline operations are becoming successful.

What is the percentage share of offline and online at PW right now?

Prateek: It’s roughly 55 percent online and 45 percent offline.

Alakh: It is very difficult to draw a line between the two, right now. The distinction is becoming increasingly blurred. We have a model called Pathshala, where students attend physical classrooms but learn through smart courses with online teachers. We also have a full integration programme combining smart courses in classrooms with online lectures. The lines are blurred for both us and the students.

With offline centres, has there been any shift in strategy? For instance, Kota is highly competitive with numerous edtech players. Does it make sense to continue focusing there, or should you explore newer, untapped territories?

Prateek: Our strategy is to avoid mega centres like Kota as a high student concentration at one place leads to many problems. Instead, we plan to open smaller, efficient centres near students’ homes. This year, we’re focusing heavily on expanding in south India, while Vidyapeeth will continue to grow at a strong pace.

Alakh: A student from UP or Bihar moves to Kota, pays for hostel, mess, other expenses, which keeps going up every year. If you look at the results, students from UP, Bihar, MP, and Maharashtra have performed exceptionally well across examinations. The eastern region, including Kolkata and Siliguri, have done a fantastic job. We have penetrated deeper into the cities with new centres, like Bareilly and Haldwani, where national brands are absent.

Our goal is for students to stay closer to home and avoid the loneliness associated with moving far away. Rajasthan (Kota) has never been a major revenue centre for us, and it still isn’t.

Do you think there is still a psychological belief among parents and students that studying in a large hub like Kota is preferable to a smaller centre closer home?

Prateek: Psychologically, parents have traditionally valued Kota-branded education due to its historical results. However, there’s a shift happening. Current trends show that top ranks are now emerging from various locations across the country, not just Kota. The results are consistent, regardless of the location—it's just the infrastructure that differs.

It's time to decentralise and move from these hubs to smaller cities. Since we haven’t invested in large buildings, we can adapt and grow more easily. Phase 1 focused on large hubs like Kota, while phase 2 targets micro hubs, such as Lucknow and Patna.

Student habits are evolving as well. They are increasingly relying on online learning and using offline centers for supplementary needs. Online education offers Gen Z the flexibility to study at their own pace, leading to a hybrid learning approach.

Alakh: The success of a student depends more on his efforts than on the location of the coaching centre. With evolving examination patterns, students from Tier 3 cities can now qualify, if they have access to quality and affordable online education. For the first time, a student (Tathagat Awatar) from a Tier 3 city in Bihar, Madhubani, achieved the top rank  in NEET exam 2024, studying at home. This signifies a shift, as many new types of students are now succeeding.

The true impact of online education is evident in stories like that of a student from Kashmir, who sold naan and chai on the streets and managed to crack an entrance exam for a government medical college, or an individual selling samosas in Noida who cleared the NEET examination. That’s the magic of online education.

We need more stories of such impactful transformations—a first doctor or professional emerging from a village. Unfortunately, discussions often focus solely on how much money has been raised, cash reserves, or profits, while the real impact remains under-reported.

With so many edtech companies still struggling, what’s PhysicsWallah getting right that others are missing?

Alakh: I believe we’re on the right track with our focus on content. Very few founders emphasise content as much as we do. Who openly talks about content? Everyone talks about everything else but content. You make the content right, the student will automatically come. We have a dedicated team of 250 people working just on content development.

We have daily ratings for teachers. Second is community. How giving are you towards the community? It is very difficult to create a balance between community loyalty and sustainability of the company. We fixed that by deciding to make cheaper courses but at a large volume for students. For this, we used artificial intelligence (AI) because you can’t ignore personalisation.

AI helped us in bringing a low-cost solution.

Prateek: If content and community remain strong, commerce will follow. This will lead to profitability, cash generation, and expansion.

Alakh: We continue to innovate. A lot of people doubted us when we decided to go offline. Despite the skepticism, we’ve seen success, including seven students from a single centre qualifying for IIT. We’re also developing a plug-in box to turn a regular TV into a smart board, which could greatly benefit government schools and rural areas. We’re not afraid of innovation and remain focused on our core offerings.

A lot of times people say that we are distracted from our core offering, but we arn’t scared of innovating.

What's the game plan for FY25, especially after the profit dip in FY24 due to growth-related spending?

Prateek: The mandate for FY24 was to capture market share, which led to a dip in profits. However, we’re confident about the long-term roadmap. For FY25, we’re targeting more than 50 percent growth.

Alakh: FY25 is expected to be our highest absolute EBITDA year. While our online operations have been nearly 50 percent profitable from day one, our offline centres, which have required significant capital expenditure, will also start delivering results over time.

Prateek: For FY24, our revenue grew 2.5X.

How about the subsidiaries? Are they also on a similar revenue trajectory?

Prateek: More or less. Xylem is growing faster than PW, in terms of revenue. Prep Online has been fully integrated with PW, and the other subsidiaries are also performing well.