Unacademy entered the US market earlier this year with the launch of USMLE, but has decided to shut down the business within months due to its inability to achieve PMF
The edtech startup’s CEO told his team that Unacademy is eyeing an IPO in the next two years and needs to cut down “a lot of unnecessary expenses”
The startup’s top management will follow the founders and take a pay cut, while Unacademy will also stop providing dedicated drivers to CXOs
Edtech giant Unacademy, which launched its global test preparation platform USMLE earlier this year, will be winding down its international operations in the coming days as it has not been able to achieve “PMF” (Profitability Mass Function).
The development comes almost five months after Unacademy
launched USMLE test preparation. The startup had marked its entry into the US market with the programme. The new course was planned to help MDs (Doctors of Medicine) prepare for clearing the United States Medical Licensing Examination (USMLE®) in the US.
Inc42 was the first to report about the launch of the programme in February this year.
Around 15 to 20 employees work with the USMLE programme and they are likely to be absorbed by the Unacademy group, sources told Inc42.
The sources said that Unacademy CEO Gaurav Munjal informed his team that the startup intends to head for an IPO in the next two years and wants to turn cash flow positive.
Munjal told his team that the startup has INR 2,800 Cr of cash, but there are “a lot of unnecessary expenses”. “We must cut all these expenses. We have a strong core business. We must turn profitable ASAP (as soon as possible),” he added.
In a bid to further reduce expenses, the founders and top management of Unacademy will take pay cuts.
The edtech startup’s founders have already taken pay cuts, and now the management will follow suit, the sources said.
Besides, Unacademy will also stop providing dedicated drivers to CXOs and business class travel for anyone, including CXOs and founders.
Earlier this year, Unacademy laid off around 1,000 employees to cut expenses.
Unacademy, founded by Munjal, Hemesh Singh, and Roman Saini in 2015, claims to have more than 50,000 registered educators and more than 62 Mn learners.
In FY21, Munjal’s gross salary was INR 1.58 Cr, whereas Singh’s was INR 1.19 Cr. Meanwhile, Saini’s gross salary was INR 88 Lakh during the year.
Unacademy’s expenses rose to INR 2,029.9 Cr in FY21. One of the major reasons behind the increase in expenses was employee benefit expenses, which rose to INR 748.4 Cr in FY21 from INR 119.7 Cr in FY20. Its expenses for salaries and wages jumped to INR 196.3 Cr from INR 52.5 Cr in FY20.
The edtech startup’s net loss rose 494% to INR 1,537.4 Cr in FY21 from INR 258.6 Cr in the previous year.
