Online learning platform Unacademy raised $440 million on August 2, 2021, led by sovereign wealth fund Temasek it said in a statement released by the company. The recent fundraiser takes the startup’s valuation to $ 3.44 billion, clocking a tenfold jump over the last 18 months.
The latest Series H fundraise saw participation from existing backers General Atlantic, Tiger Global, and Softbank Vision Fund. In addition, new investors joining the spree are Aroa Ventures, the family office of OYO Founder Ritesh Agarwal, and Deepinder Goyal, Co-Founder and CEO at Zomato. Some angel investors of Unacademy have exited in this round, the statement said.
Unacademy has clocked one of the fastest growth rates witnessed by a mid-stage consumer internet startup in India, the statement said. The latest round comes after the one in January 2021 when Tiger Global, Dragoneer Investment Group, Steadview Capital and General Atlantic doubled down on their earlier investments through a secondary transaction.
Indian edtech industry poised to make it big
According to a report released by transaction advisory firm RBSA Advisors India’s edtech industry will reach $30 billion in the next decade. The report released on April 2021 had put the current market size of the industry at about $700-800 million.
Riding on the back of factors like access to good quality internet and an upgrade to 4G from earlier 2G and 3G services, this industry has attracted private equity investments of $4 billion in the last five years, leading to the emergence of global edtech leaders like Byju’s commanding a valuation of $15 billion, the report stated.
The massive adoption in the K-12 segment is being driven by access to smartphones. Live interactive classes, which are crucial to K-12 learning, have become accessible with better connectivity and the recent Covid-19 induced lockdown has acted as a catalyst in pushing this segment online.
Online education offerings for classes 1 to 12 are projected to increase 6.3 times by 2022 from the base of 2019 and the post-K-12 market is expected to grow 3.7-fold to touch $1.8 billion, stated the report. As the report was published, China was on top with almost two-thirds of venture capital funding in 2020 and the investment in the US and India each at around $2.5 billion.
Indian edtech will flourish as billionaire Chinese slump
However, recently China has placed new restrictions on its online education industry. These state-enforced restrictions have come as music to the ears of Indian edtech companies such as Byju’s, Unacademy and upGrad, who are witnessing a surge in their valuations as they go in for aggressive acquisitions before hitting the IPO route.
In a crackdown on its $100 billion edtech sector, China decreed a few days ago that companies offering private tutoring and online education cannot go public, raise foreign capital or make profits if they provide online school curricula. As a result, Chinese edtech companies plunged into uncertainty and those listed on the US stock exchanges saw their stocks collapse.
PE funds backing Chinese edtech companies have also invested in Indian edtech companies. These companies, in an attempt to mitigate their losses from the great Chinese slump, and other players may now make bigger bets in India given the serious challenges they will face in follow-up investments in China.