Allen In Talks To Acquire Unacademy At $800 Mn Valuation

Offline test preparation centre Allen Career Institute is reportedly in advanced discussions to acquire Gaurav Munjal-led edtech startup Unacademy at a likely valuation of $800 Mn.

This would be a discount of over 75% to its peak valuation of $3.44 Bn in 2021, when Unacademy raised $440 Mn in a Series H funding round, led by Temasek, ET reported.

Inc42 has reached out to Unacademy for comments on the development. The story will be updated based on the response.

Sources told ET that talks of a merger between the two parties have been going on for months but promoters of Allen — the Maheshwari family — have not yet agreed to the deal terms.

A major sticking point in the negotiations between Allen and Unacademy is how much valuation would the edtech startup command if not for its cash reserves worth $160 Mn, the report said.

The valuation of the two companies will likely decide the share swap ratio. Further, a decision has yet to be made on the amount of cash-payouts to founders and early backers of Unacademy.

It is pertinent to note that Unacademy was previously in talks for a potential merger with K-12 Techno Services, but the talks fell through due to the edtech startup’s “shaky unit economics”.

Founded in 2015 by Gaurav Munjak, Hemesh Singh and Roman Saini, Unacademy started as an online test preparation platform. Since then, it has expanded to offline or hybrid learning and also operates verticals such as Relevel (job assessment tests), NextLevel (gamified job search), and Graphy (course creation and management).

Unacademy posted a net loss of INR 1,678.1 Cr on an operating revenue of INR 907 Cr in FY23. The company has seen a slew of top level exits since last year with cofounder Singh stepping down from his executive role and moving to an advisory role. 

As Inc42 reported, Unacademy fired 250 employees earlier this year as part of a restructuring exercise to become profitable.

The potential sale of Unacademy to Allen comes at a time when India’s edtech ecosystem is facing significant headwinds from severe funding crunch, and consequent layoffs, to shutdowns to bankruptcy proceedings against BYJU’S, which was once the largest Indian player in the space.

According to Inc42 data, the Indian edtech startups raised $283 Mn in 2023 against $2.4 Bn in 2022, accounting for a massive 88% year-on-year (YoY) decline. The number of deals also plummeted 45.91% YoY to 139 in 2023 from 257 in 2022.