(Saturday Deep Dive) - Unacademy

This week’s deep dive is about Unacademy, the EdTech powerhouse. As with many other EdTech companies in India, Unacademy got it’s start as a YouTube channel. We go into extreme detail about the company. Our goal was to create the most detailed writeup about Unacademy that could be found on the internet, and we think we have achieved it.

We hope you enjoy reading the deep dive as much as we did writing it.

Table of Contents

• Introduction: India’s booming test prep industry

• Unique Selling Proposition of Unacademy

• Unacademy and Its Competition: A Detailed Analysis

• Challenges

• Founders

• Revenue Model

• Funding

• Acquisitions

• Impact of these Acquisitions on Unacademy

• The Impact of COVID-19

• Offline Coaching Centers

• Marketing and Advertising

• Future Plans

Unacademy, an EdTech powerhouse, was founded in 2015. It started as a YouTube channel by Gaurav Munjal in 2010 and officially registered as an educational company in Bangalore in 2015.

Sorting Hat Technologies Private Limited, the parent company, was incorporated on August 6, 2015. The directors include Bhavin Mahendra Turakhia, Sumit Jain, Sujeet Kumar, Gaurav Munjal, Shantanu Rastogi, Hemesh Kumar Singh, Roman Saini, and Sumer Juneja.

The company's mission is to democratize access to high-quality education. With over 50 million active learners and more than 1,000 educators, Unacademy runs over 2,000 live classes daily and has accumulated over one billion watched minutes of recorded content.

Unacademy offers coaching for over 200 courses, including UPSC, GATE, IIT, NEET, bank exams, NET exams, judiciary exams, CAT, defense exams, and CLAT. The platform customizes the learning experience based on the chosen mode of learning (online or offline), language, and class. The dashboard allows users to select batches, schedule classes, and choose specific teachers for different subjects.

As an online learning platform, Unacademy simplifies learning and teaching through educational videos and lectures. These typically feature a teacher or voice guiding the lesson, using images and illustrations to make learning engaging. For technical subjects like mathematics, teachers write and explain problems on the screen, akin to a physical classroom setting.

Unacademy also conducts the Unacademy Scholarship Test (UST), a paid scholarship test offering up to 90% scholarships for Unacademy Centre subscriptions for IIT JEE, NEET UG, Foundation, and Board Preparations.

In 2021, Unacademy had 800,000 active paid users. In FY 23, the company reported revenue of Rs. 1044.39 crore and expenses of Rs. 2734.22 crore, resulting in a loss of Rs. 1678.15 crore. Despite the loss, this represented a 39.45% improvement from the previous fiscal year.

Introduction: India’s booming test prep industry

India’s competitive test market has seen rapid growth in recent years. The aspiration for stable government jobs drives many towards exams like UPSC, SSC, and state-level public service exams, while exams like NEET, JEE, CAT, and GATE are gateways to prestigious institutions.

Cities like Kota, Delhi, and Hyderabad are renowned coaching hubs, drawing millions of students aspiring to be doctors, engineers, and IAS officers. EdTech companies like Unacademy, Byju’s, UpGrad, Toppr, and Vedantu offer accessible, flexible learning options at home, providing live and recorded lectures, mock tests, practice sessions, and one-on-one problem-solving classes. They also build trust by offering personalized portals for parents to track their child’s progress.

According to Horizon Grand View Research, the global EdTech market is expected to reach $348,410.6 million by 2030. Another report by India EdTech projects global EdTech expenditure to grow at around 12% CAGR, reaching $342 billion by 2025. Holon IQ reports 13 EdTech Unicorns worldwide as of January 2023, collectively valued at $34 billion, including UpGrad from India, valued at $2.3 billion.

Unique Selling Proposition of Unacademy

1. Diverse Course Range: Beyond traditional IIT and JEE prep, Unacademy offers specialized courses for CA preparations and skill enhancement programs, catering to a larger audience.

2. Expansion and Acquisitions: Unacademy expanded rapidly, launching offline centers when the lockdown lifted to meet the demand for in-person learning.

3. Technology Integration: Utilizing AI and machine learning, Unacademy personalizes the learning experience.

4. Community Engagement: Through live sessions with celebrities and motivational talks, Unacademy fosters a supportive community.

5. Marketing: Partnerships with IPL and inspirational campaigns help build the brand.

Unacademy’s innovative approach and commitment to enhanced learning experiences set it apart from competitors, contributing to its growth in India.

Unacademy and Its Competition: A Detailed Analysis

Unacademy faces competition from both EdTech giants like Toppr and Vedantu and offline giants like Allen with its offline centers.

• Byju’s: Once a formidable competitor, Byju’s has faced financial struggles, legal challenges, and investor discontent. Valued at $22 billion at its peak, Byju’s now faces significant challenges, including defaults on $1.2 billion loans and extensive job cuts.

Let’s analyze Unacademy with its competitors based on parameters like product, market reach, goals and focus-

Challenges

1. Scaling Offline Centers: Funding crunch and a return to traditional learning methods have prompted heavy investment in offline and hybrid models.

2. Staff Layoffs: Workforce reductions were driven by funding slowdowns and the need to reduce cash burn.

3. Suspension of Educator Contracts: Contracts of NEET and JEE doubt-solving educators were suspended in 2022 without notice.

4. Shutdowns: Unacademy shut down some ventures due to financial stress.

5. Competition: Intense competition from Allen led to legal battles and conflicts over teacher poaching.

6. Affordability: Maintaining competitive pricing is crucial to retain students.

Founders

Gaurav Munjal (CEO), Dr. Roman Saini, and Hemesh Singh brought Unacademy to life. Munjal founded FlatChat, later sold to CommonFloor, and transitioned to Unacademy. Saini, a young IAS officer, left civil service to pursue his passion for education. Singh, the tech expert, served as CTO before transitioning to an advisory role.

Revenue Model

Unacademy’s primary revenue source is its subscription model. The platform also generates revenue through Relevel, Graphy, YouTube channels, and in-app purchases. Let’s look at Unacademy’s revenue cycle over the years.

Funding

Unacademy has raised a total funding of $880M over 12 rounds. The last round of money was raised in 2021. The valuation of the company at that time was $3.13 billion.

Following is the list of fundraising rounds-

Acquisitions

Unacademy has acquired 12 companies in total, the latest one being Swiflearn, acquired on November 3, 2021. Unacademy has acquired the following companies over the years-

Unacademy's acquisitions have been a mixed bag, with some contributing positively to its growth and others proving less successful.

Successful Acquisitions

Less Successful Acquisitions

Impact of these Acquisitions on Unacademy

These acquisitions have had varied impacts on Unacademy’s growth:

Positive Impact:

1. Diversification: Successful acquisitions like PrepLadder and WiFiStudy have helped Unacademy diversify its offerings and strengthen its position in different educational segments.

2. Market Expansion: Acquisitions allowed Unacademy to expand into new markets, particularly in specialized test preparation areas, which have been lucrative.

Negative Impact:

1. Financial Strain: Unsuccessful acquisitions led to significant financial losses, including impairment charges and increased expenses, contributing to the company’s overall financial challenges.

2. Operational Challenges: Managing and integrating multiple acquisitions created operational complexities and required substantial resources, impacting efficiency and profitability.

In conclusion, while some acquisitions have propelled Unacademy forward by expanding its reach and diversifying its offerings, others have posed financial and operational challenges, highlighting the mixed outcomes of its aggressive acquisition strategy.

The Impact of COVID-19

The pandemic accelerated the shift to online learning, with platforms like Unacademy seeing significant growth but challenges came along with this growth due to the drastic but short-lived shift in the landscape of education. Let’s look at how Unacademy survived the unexpected huge demand during the pandemic and then made a shift to offline centres when things returned to normalcy.

• Growth and Challenges: Unacademy experienced notable growth during the pandemic, driven by the surge in demand for online education as lockdowns forced educational institutions to close. The company's valuation rose dramatically, reaching $2 billion in 2020. However, this rapid growth came with challenges. The company faced a funding winter, leading to cost-cutting measures such as laying off employees and suspending contracts with some educators in 2022.

• Educational Shifts: The pandemic led to a broader adoption of digital learning platforms. Unacademy capitalized on this shift by expanding its offerings and user base. However, the return to offline education post-pandemic presented new challenges, as some students and educators reverted to traditional learning methods, potentially impacting Unacademy's user engagement and revenue streams.

• Social and Economic Impacts: The broader economic downturn caused by the pandemic also affected Unacademy's financial environment. The global economic slowdown, inflation, and increased interest rates created a challenging backdrop for the company's operations and growth prospects. Despite these issues, Unacademy continued to push forward, adapting to the changing educational landscape and economic conditions.

• Community and Controversies: Unacademy launched initiatives such as Shikshodaya to support education for girls, which was well-received. However, the company also faced criticism for various issues, including a data breach in 2020 and controversies over content and educator layoffs.

Offline Coaching Centers

Unacademy opened its first offline centers in 2022 to meet the demand for in-person education post-lockdown. Now, it has over 60 centers nationwide.

Challenges in opening offline centres:

1. Infrastructure and logistical costs: Establishing offline centres required significant investments to secure locations and set up digital classrooms with integrated technology.

2. Quality Expectations: Ensuring quality education in the offline model as it was established in the online format.

3. Adhering to safety protocols: Ensuring that offline centres adhered to COVID-19 safety protocols such as social distancing and sanitization.

4. Market competition: Offline coaching centres were well-established. Unacademy had to differentiate itself and offer USP to attract students to its offline centres.

5. Hiring teaching staff: To run its offline centres, Unacademy had to hire teachers from the location of centres. This led to legal battles and conflicts with established coaching centres over teacher poaching.

Unacademy’s offline centres brought several benefits to the company, let’s look at them:

1. Geographical Expansion: Offline centres allowed Unacademy to reach students who prefer traditional classroom settings.

2. New Revenue Channel: Offline centres added a new revenue channel in the form of tuition fees.

3. Value-added services: Monetizing the services like exam preparation classes and counseling.

4. Brand visibility and Trust: Offline centres increased brand visibility and increased trust among parents and students as they could meet the teachers face-to-face.

5. Market differentiation: By offering both online and offline education facilities, Unacademy differentiated itself from the competition which may only focus on either online or offline mode.

Marketing and Advertising

Unacademy uses aggressive marketing, including digital campaigns, TV commercials, and partnerships with celebrities like Sachin Tendulkar. Unacademy's branding and promotional strategies have been diverse and innovative, leveraging multiple platforms and approaches to engage with their target audience.

Let’s elaborate on these strategies.

Digital Marketing and Social Media

• Comprehensive Digital Campaigns: Unacademy has heavily invested in digital marketing across platforms such as Google, social media, and OTT (Over-the-Top) platforms like Netflix and Amazon Prime. This broad presence helps them reach a vast audience.

• Social Media Engagement: Unacademy leverages platforms like Facebook, Instagram, Twitter, and YouTube to distribute content, promote the brand, and interact with learners. Their content includes educational videos, fun creatives, riddles, and more to keep the audience engaged.

Content Marketing and Branded Content Initiatives: Unacademy produces a variety of branded content to engage with youth culture. Notable initiatives include:

Celebrity Endorsements and Partnerships

Community Marketing

• Unacademy Learning Festival: This campaign focused on driving conversations within student communities, promoting subscription offers, and sharing success stories from members. It was designed to foster a sense of community and advocacy among users.

Sponsorships and Offline Presence

• IPL Sponsorship: Unacademy became an official partner of the Indian Premier League (IPL) in 2020. This high-visibility sponsorship helped the brand gain widespread recognition and align itself with a popular national event.

Strategic Partnerships and Brand Ownership

• Agency Collaborations: Unacademy works with marketing agencies to ensure consistent and effective branding strategies.

Educational Content and Accessibility

1. Emphasis on Quality and Accessibility: Unacademy's marketing campaigns highlight the importance of digital access to quality education. They aim to provide learners with the necessary tools and resources to succeed, regardless of their geographical location or financial background.

2. Blended Learning Approach: Recognizing the importance of offline education, Unacademy integrates its online offerings with physical coaching centers. This hybrid model ensures that educational opportunities are available to a broader audience.

Pricing and Promotions

• Flexible Payment Options: Unacademy offers various pricing strategies, including affordable subscription models and promotional discounts, to attract and retain students. This approach makes quality education more accessible to a wider audience.

In summary, Unacademy's growth strategy involves a multifaceted approach that includes digital marketing, content creation, high-profile partnerships, community engagement, and flexible pricing models.

Future Plans

Unacademy aims to expand its reach, diversify course offerings, and leverage technology for enhanced learning experiences. The company is preparing for an IPO and aims to run sustainably.

In conclusion, Unacademy’s journey from a YouTube channel to a leading EdTech platform highlights the vision and efforts of its founders. Despite challenges, the company continues to innovate, adapt, and expand, with significant scope for improvement.