Unacademy's new raise and new approach

1st Aug 2021

Hi all, hope you all had a great weekend. Anmol is somewhere in Utah this weekend, while I had a pretty laidback weekend at home. I watched Dil Chahta Hai in its entirety after ages, and mostly felt immense bouts of nostalgia. That movie defined by school years, and it makes me feel really, really old to realize its twenty years old. It still holds up immensely well though. All that promise of India in the early 2000s!! We were also working this weekend on our very first syndicate deal. Due to regulations we can't share details of the company on Substack, but thank you to everyone who expressed interest, and the many who have committed investments!!

Coming to the newsletter this week, in addition to the general news, we look at edtech Unacademy's recent raise and plans.

🎓Unacademy raises $440M, now valued at $3.4B

  • Edtech platform Unacademy raised $440 million in a new financing and is now valued at $3.4B. The round was led by Temasek. Mirae Asset and existing investors such SoftBank Vision Fund 2, General Atlantic, Tiger Global also participated, as did Zomato co-founder and chief executive Deepinder Goyal and Oyo founder Ritesh Agarwal.

  • India continues to be one of the most lucrative edtech markets for global investors, especially given the recent crackdowns on edtech in China. Unacademy rival, Byju's is widely considered India's most valuable start-up now, with a valuation of ~$16.5B.

  • Indians spend more on education on average than any country save China, and this is only likely to increase. If the broader economy tanks, education will become even more important for most Indians — the only relatively certain path to well paying jobs, a middle / upper class lifestyle, or a passport to life abroad. And unlike China, India's dismal spending on state education means that more Indians have to spend discretionary income on private educations, tutors etc.

  • Unsurprisingly, Unacademy's largest vertical is test preparation. According to the Economic Times, the company is generating a $200M run rate for this vertical. It's second bug business in the K-12 segment, where it focusses on after class prep etc. and where it has an $18M annualised run rate.

  • In addition to using the fresh funding to double down on these businesses, Unacademy will be using the fresh funds to focus on segments like hiring and reskilling. Unacademy's Revel platform caters to this space, and there's a lot of potential here IMO. It's still crazy to me that Naukri.com continues to be the big player in the space.

  • I'm personally also pretty bullish on Unacademy's Graphy platform, which focuses on education creators. Just last week, the company said it was creating a $40 million fund for educators on its platform. I think there's some interesting content on Graphy already. How that develops is to be seen, but in general I also cheer for edtech that doesn't just play to test prep.

  • Clearly there's a lot going on with Unacademy. It's just another reminder of how big the opportunity for a holistic edtech company is, and why just so much money is pouring into the sector in India.

📰 Other news

  • We had a couple of new additions to the Indian unicorn club this past week. OfBusiness, the B2B e-commerce platform which helps companies source raw materials, bid for government tenders, and helps with financing, raised money from SoftBank to hit a $1.57B valuation. And online automobile marketplace Droom raised $200M in pre-IPO round from various investors and was valued at $1.2B.

  • More companies are going to IPO! Online insurance aggregator, PolicyBazaar, whose IPO was expected, has submitted paperwork stating that it is seeking to raise $809 million in the IPO. And there's talk that Ola, the Uber rival, will also IPO in the coming months.

  • B2B messaging platform Gupshup has raised an $240M from investors like Fidelity Management, Tiger Global (of course), and others. Gupshups API enables developers and businesses to build messaging and conversational experiences.

  • And in more consumer messaging, Mohalla Tech, the parent company of social media platform ShareChat and short video sharing app Moj, has raised $145M in an extension of its Series F led by Temasek, Moore Strategic Ventures and Mirae-Naver Asia Growth Fund. ShareChat has gone from strength to strength since TikTok was banned in the country.

  • Meesho founder Vidit Aatrey made the case for a regulatory push for digitzation of India's Micro Small and Medium Enterprises (MSMEs) - which make up ~99%+ of all enterprises in India - this week. There's no doubt there's a need for this, but I think many MSMEs and the respective trade bodies look at digitization as something to be feared.

  • Also on the topic of MSMEs, this past week the Rajya Sabha on Thursday passed the Factoring Regulation (Amendment) Bill that seeks to open up factoring business to non-bank lenders and address the capital needs of small businesses.

  • Apollo Hospitals Enterprise is India's largest hospital chain. It operates 71 hospitals and owns more than 4,000 pharmacies across 24 states. Now its focusing on its digital presence too.