Unacademy Layoffs: A Sign of Trouble in the Edtech Industry?

250 workers at Unacademy, an Edtech unicorn valued at over $1 billion, were recently let go. The company's plan to improve efficiency and streamline operations includes this significant decrease in employment. Unacademy wants to reduce labour costs to maximise resources, enhance operational efficiency, and gain a stronger foothold in the cutthroat Edtech market. As a result of the company's continuous attempts to adjust to market needs and maintain long-term sustainability, layoffs took place sometime in July 2024. Notwithstanding the obstacles, Unacademy is committed to fulfilling its goal of offering high-quality education via its cutting-edge platform.

Ten percent of employees were let go in March 2023 during the Unacademy Layoffs.

In May of this year, 145 workers were laid off by its group company, PrepLadder, which operates a NEET PG preparation platform. Nevertheless, the Unacademy development occurs just a few weeks following the departure of Hemesh Singh, the company's co-founder and chief technical officer.

In August 2021, Unacademy raised $440 million in its most recent equity round, valued at $3.44 billion. Since then, the company has undergone several changes, including closing acquired verticals and major layoffs. However, it has also opened several offline centres. With a new app, the company has entered the language learning market. Unacademy reported a 26% increase in operational revenue to Rs 907 crore for the fiscal year that ends in March 2023 (FY23) while managing losses to Rs 1,004 core, a decrease of over 40%. Additionally, the company stated at the start of FY24 that it was almost at group profitability. The company still needs to file the audited annual report, but it still needs to be the year (FY24).

Over the last few years, edtech companies have faced many challenges.

TheKredible's research shows that in the first half of 2024, edtech businesses raised a mere $138 million through 21 agreements. The segment led the Indian startup ecosystem by snatching up investment in 2021 and 2022. Still, right now, funding appears to be highly scarce to any edtech businesses, mainly because the segment's poster boy, Byju, is facing bankruptcy. Furthermore, when the pandemic fades, there has been a return to in-person instruction, which has resulted in variable user engagement and revenue streams. To keep customers and maintain growth, businesses have had to change course and broaden their product offers.

Finally, obtaining money has become more difficult in the post-pandemic economic environment. Investors are becoming more circumspect, emphasising profitability and long-term growth over simple expansion. These difficulties have forced edtech businesses to adapt quickly, develop new ideas, and improve their business plans to survive in a constantly changing and frequently unpredictable environment.