Unacademy’s Gaurav Munjal Spills The Beans On The Edtech Giant’s M&A Strategy

During the live session on Day 2 of The Makers’ Summit 2022, as Unacademy’s Munjal opined that M&A is a bad strategy when dealing with strategic inflection points, he was questioned about edtech giant’s recent acquisitions in the last couple of months.

For instance, as a part of the expansion strategy, in 2021 alone Unacademy acquired five startups — CBSE & ICSE-centred online tuitions for K-10 classes, Swiflearn, creator-focussed edtech platform Spayee, game streaming startup Rheo TV, networking and recruitment platform TapChief and CAT and MBA preparation platform Handa Ka Funda. 

Answering about Unacademy’s acquisitions, Munjal said that the startup acquires other companies for avenues and not revenues. He added that the acquisitions are mostly in line with the company’s vision to build teams.

“One of the things that we realised is that because we are a very different culture – a very fast-paced culture – some of the best people who work with us are founders. So except the PrepLadder team, there is literally no acquisition that we did for revenue. Either we would have done it to acquire a particular teacher [in the case of HandaKaFunda] or we would have done it to acquire a team.” 

He said, “At Unacademy, for example, the TapChief team is working on Relevel, the RheoTV team is working on the tech for Relevel and the Swiftlearn team is helping us build our global test prep solution.”

He cleared the air on ‘mergers and acquisitions to navigate strategic inflection points’ by stating that big revenue M&As – the likes where a company acquires another company that has 20%-plus revenue – are not the right strategy and not small M&As for teams, engineers or in the case of Unacademy for ‘teachers’.

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M&As Bad Strategy For Strategic Inflection Points: Munjal

In 2010, Gaurav Munjal started Unacademy as a YouTube channel. Five years later, the startup was officially registered as a Bengaluru-based edtech and it started by offering free lessons on test prep topics. 

Today, the edtech unicorn claims to have more than 50,000 registered educators and over 62 Mn learners. It offers classes in 14 languages across 5,000 cities and offers preparation material for several professional and educational entrance exams in the form of live classes both free and via subscription.

Unacademy’s growth was not without strategic inflection points. For the uninitiated, a strategic inflection point is a time period when an organisation must respond to disruptive change to avoid deterioration of its business — i.e. a decisive moment for a company that marks the start of significant change.

He further talked about the strategic inflection points that the startup faced, including the en masse outflow of educators from its platform to traditional coaching institutes in 2018. That was the point when the startup worked on its monetisation aspect to retain teachers.

During the session, Munjal said, “Every time your business goes through a strategic inflection point, [for example] where there is a new technology, either you can do M&As that is, you can start acquiring big companies, you can be on the front page of the newspaper every day, or you can do experiments and chaos and figure out what works for you.”

He further added that M&A is not the right strategy, since the acquired companies will also go through strategic inflection points at some point, and ‘it will be a house of crunch’. 

The House Of Unacademy

Unacademy is backed by major VCs and private investors including General Atlantic, Facebook, Nexus Ventures, Blume Ventures, and Flipkart CEO Kalyan Krishnamurthy. The edtech unicorn had last raised $440 Mn in Series H funding at a valuation of $3.4 Bn in August 2021. 

The Unacademy app and website offer test prep material for IIT-JEE, UPSC, SSC, NEET and GATE, among others. Unacademy has also taken its test prep approach outside India to launch medical test prep in the US. In 2021, it launched Relevel, a new gamified product to enable job-seekers to showcase their skills and get employed at some of India’s largest startups.

The startup also has a third branch, Graphy, that allows content creators to grow their audience, monetise their skills, and host live cohort-based courses. It recently also launched Unacademy Stores, where users will be able to have a walk-in experience via demos i.e how Unacademy teaches and students, as well as parents, will get counselling sessions.

The entrance exams-focussed learning platform has been aggressively building its presence across new categories and exploring international expansion – on which the teams of acquired startups are working.

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