The talent transformation platform Udacity is looking at selling a majority stake in the company through an equity swap
Currently, talks between two parties are seeing good progress and the valuation being looked at is around $100-120 Mn
Udacity is reportedly struggling with its customer retention rate
Edtech unicorn upGrad is reportedly in talks to acquire US-based Udacity, which has been exploring sale for a few months now.
The talent transformation platform Udacity is looking at selling a majority stake in the company through an equity swap, ET reported.
While Udacity is estimated to be valued at over $100 Mn, it had earlier sought about $200 Mn from an earlier suitor. However, the prospect had passed.
Currently, talks between two parties are seeing good progress and the valuation being looked at is around $100-120 Mn, which is about 10-12 times its EBITDA, the report added citing a source.
As per another source quoted by the publication, Udacity had a revenue of around $100 Mn. But the edtech platform is struggling with its customer retention rate. Among its other issues, the platform’s 70-75% of the revenues come from enterprise clients as its B2C business has been facing difficulties.
However, UpGard denied the development to the ET.
Founded in 2011 by former Google executive Sebastian Thrun, Udacity raised a $105 Mn Series D round at a valuation of $1 Bn in 2015, joining the unicorn club. It counts high-profile investors such as Andreessen Horowitz as its backers.
It has raised overall $240 Mn till date, as per Crunchbase. Udacity offers programmes in artificial intelligence, machine learning, and robotics. It has more than 100 enterprise customers including Airbus, Bertelsmann, BNP Paribas, Leidos, Mazda, and the United States Air Force. Besides, it collaborates with global industry partners including Google, Mercedes-Benz, and NVIDIA, among others.
“Udacity’s operations have shrunk significantly, and thus they’re now willing to sell. This would be at a major erosion in value compared to what the unicorn was at its peak,” a source said as quoted in the report.
On the other hand, Indian edtech unicorn upGard is diversifying its portfolio lately as its K12 segment remains under pressure after the reopening of academic institutes. Recently, it announced its foray into the Pacific region with the establishment of its first offline medical institute in the Republic of Vanuatu.
Called the upGrad Institute of Medical Sciences (UIMS), the college will train students in modern-day clinical competencies and impart medical skills.
The acquisition talks come at a time when UpGrad, as well as, the entire edtech industry is struggling with various issues such as layoffs, mounting losses among others.
Ronnie Screwvala’s upGrad reported a widened consolidated net loss of INR 626.6 Cr in the financial year 2021-22 (FY22) as against INR 211.1 Cr in the prior fiscal year as its expenses surged.