Exclusive: Matrix Backed Edtech Startup Crejo.Fun Shuts Down; Failed To Raise Funding

Matrix Partners-backed Crejo.Fun has become the latest Indian startup to shut operations amidst the economic downturn and funding winter.

The cofounders of the extracurricular activity edtech startup informed the employees about their decision to shut down the operations in a townhall, sources told Inc42. 

The cofounders – Ankit Agarwal and Vikas Bansal – told employees that lack of funding and reopening of schools made them take the decision to wind down the operations. 

The startup had a workforce of 170-200 employees, including on roll and off roll ones. The reopening of schools post pandemic led to a drastic drop in kids enrolling on the platform, the sources said.

Cofounder Bansal confirmed the development with Inc42. In a written statement he said, “The company has decided to take the tough decision to wind down its operations. We had great customer love with ratings of 4.9 and we continued to grow well even post school reopening, (~7x growth in the last 6 months). However we were running out of funds and while we were trying to raise capital for the last couple of months, but given the fundraising environment, we were unable to raise funds.”

The startup claims to have refunded fees to all its customers. 

“We have successfully got jobs for more than 90% of our employees and are in active discussions to place the rest. We will also be providing July salary to them. We are also trying to sell the IP and the product so that we can return some investor capital,” Bansal added. 

Crejo.Fun has also offered one-month salary as severance pay to the employees and would also help them find new jobs, sources added. 

Crejo.Fun was founded by IIM Bengaluru alumni Bansal and Agarwal in 2020. It was an online extracurricular learning platform built with the intent to help children discover their passions and interests through creative learning. As per its website, the startup offered yoga, chess, dance, public speaking, arts & crafts classes, among others. The courses were priced between INR 8,000 to INR 26,999. 

Last year, when the startup was still in stealth mode,  it raised $3 Mn in a pre-seed round from Matrix Partners and 021 Capital. The funding round also saw participation from angel investors such as Kunal Shah, Sameer Nigam, Ankit Nagori, Sujeet Kumar, among others. 

In FY21, the edtech startup had earned INR 19.3 Lakh in revenues, which included sales worth INR 16,102. During the same period, the startup’s expenses stood at INR 1.1 Cr, leading to a loss of ~INR 93 Lakh.

Dark Clouds Over Edtech Future In India

The edtech sector received a boost during the pandemic, raising close to $6.1 Bn in funding in 2020 and 2021. However, with the impact of the pandemic receding and educational institutes reopening, it has been witnessing layoffs and shutdowns. Earlier, Alpha Wave-backed Udayy and SuperLearn shut down their operations. 

Edtech startups focussing on extracurricular activities lately have been struggling to raise capital. With reopening of schools, extracurricular activities have taken a backseat in majority of Indian households.

For instance, SuperLearn, a two-year old Bengaluru-based startup focusing on extracurricular activities such as hobbies had to wind down its operations as it failed to secure funding. Similarly, another Bengaluru-based startup FrontRow which managed to raise $14 Mn in its Series A and had roped in several celebrities/influencers had to let go of 145 employees due to “market conditions”.  Similarly, Yellow Class, had to let go of 19 employees last month. 

The edtech sector, which has produced 6 unicorns during pandemic – Unacademy, Eruditus, UpGrad, Vedantu, Lead School and PhysicsWallah, has laid off 3,898 employees, including 1,000 forced resignation at WhiteHat Jr, in 2022.