Edtech Unicorn LEAD Bags INR 160 Cr Debt Funding

Barely a day after LEAD fired 60 employees, the edtech platform has announced that it has raised INR 160 Cr ($19.59 Mn) in debt funding from financial institutions and venture debt firms. 

The latest round was a mix of long term capital funding as well as working capital financing. While Alteria Capital and Stride Ventures pitched in for long term capital, banks namely – Standard Chartered Bank, HDFC Bank and ICICI Bank – helped raise working capital requirements. 

The startup will deploy the capital to finance organic and inorganic growth ambitions.

“… LEAD is poised for 2X growth and this latest round of funding will help us fast-track our mission of  providing high quality, integrated school edtech solutions to over 60,000 schools across India by 2026,” said LEAD chief executive officer (CEO) and cofounder Sumeet Mehta.

Echoing the sentiment, Partner at Alteria Capital Ankit Agarwal said, “In line with our core thesis of backing high-growth companies that drive deep innovation and impact, we are excited to have been a part of the debt round in LEAD School… We are confident that our investment will further help LEAD achieve its growth objectives.”

Founded in 2012 by Mehta and Smita Deorah, LEAD operates at the intersection of technology and pedagogy to operate an integrated teaching and learning system.  It claims to offer its integrated module to schools across 400 towns and cities that reaches more than 1.2 Mn students and over 25,000 teachers.

The startup turned unicorn in 2022 after raising $100 Mn as part of its Series E funding round from WestBridge Capital and GSV Ventures. This isn’t the first time that the startup has raised debt funding. Earlier in December, LEAD bagged INR 35 Cr from the venture debt firm, Alteria Capital.

The Debt Mania

The fundraise comes amid a slew of developments for the edtech player. A day earlier, the Mumbai-based LEAD sacked 60 employees across tech and product verticals. 

This was the second round of retrenchment at the startup in the past 5 months. Prior to this, the company also laid off around 100 employees as part of a supposed ‘performance appraisal’ back in August 2022.

This also comes close on the heels of LEAD acquiring learning company Pearson’s K-12’s business in India last week. At the time of the announcement, the edtech company said it would fund the acquisition through new fundraising and internal accruals.

But, what has played spoilsport for the company has been its mounting losses. LEAD reported a standalone loss of INR 397.1 Cr in FY22, up 3.1X compared to INR 126 Cr in FY21.

This has compounded matters for the startup which has also been reeling under a funding crunch that has gripped the Indian startup ecosystem. While LEAD claims that the latest funding round underscores ‘LEAD’s ability to attract traditional financing’, the entire startup ecosystem has been suffering from a funding winter that has dried up funding to a larger extent. 

As funding becomes more scarce, more and more startups are looking at debt funding to fuel their growth prospects and to scale their operations.

While LEAD claims that the latest funding round underscores ‘LEAD’s ability to attract traditional financing’, the entire startup ecosystem has been suffering from a funding winter that has dried up funding to a larger extent. 

Earlier this month, neobanking major Jupiter secured INR 100 Cr in venture debt from Alteria Capital. Prior to that, education-focused fintech platform Varthana also raised $7 Mn in a debt funding round from US-based global investment firm MicroVest via NCDs. 

In December, foodtech unicorn Rebel Foods also secured INR 55 Cr in a debt funding round from InnoVen Capital and Trifecta Capital while quick commerce startup Dunzo also picked up $6.2 Mn in debt funding from BlockSoil India in the same month.