In an effort to achieve profitability ahead of a potential public listing sometime over the next two years, edtech-start Unacademy announced a series of cost-cutting measures, including the cessation of his sponsorship of the Indian Premier League (IPL) from next year. The firm also briefed employees on other belt-tightening measures, including wage cuts for founders and management, business travel restrictions for employees and its tutors, and stopping complimentary meals and snacks at its offices.
Why are Unacademy’s new measures significant?
The development comes amid a freeze on funding available to Indian start-ups, which has forced a number of established businesses such as Unacademy to lay off staff and close entire business verticals. Unacademy is said to have laid off anything between 700 and 1,000 people and earlier closed its K-12 (Kindergarten to Class 12) business vertical.
In total, Indian beginners have handed out pink slips to more than 12,000 people so far in 2022, the layoffs being led mainly by edtech firms like Byju’s and Vedantu, apart from Unacademy.
As the demand for online tuition declined with the removal of Covid-19 restrictions, Unacademy announced an outing in the offline learning space in May this year by launching its own coaching centers that offer tuition for competitive exams. The startup apparently spent hundreds of crores recruiting employees for its first center in Kota, the country’s private coaching center. Its big rival Byju’s has entered the offline coaching space with its billion-dollar acquisition of Aakash Educational Services.
What details are known about Unacademy’s cost cuts?
In response to a Twitter user, Gaurav Munjal, Unacademy’s co-founder and CEO, said: “The past three years with IPL have been incredible. Our Brand has gone to another level. I recommend all emerging brands to work with IPL. Our focus has changed. Hence the decision not to do IPL next year. ”
In an internal note to employees, Munjal said that the firm’s higher level management (CXOs) and some other employees will no longer be provided with Business Class tickets for travel. Those who want an upgrade, “can pay out of their own pocket,” Munjal said in the memo, a copy of which was seen by The Indian Express.
He also said that the firm’s CXOs would also lose some other privileges, such as dedicated managers, adding: “We will close certain businesses that failed to find PMF (product market pass), such as Global Test Prep. “
However, Munjal assured employees that the cost-cutting measures did not mean the firm was in a bad financial position – it had more than Rs 2,800 crore in the bank as of Monday, he said. “But now the goal has changed. We need to do an IPO (initial public offering) in the next two years. And we need to change cash flow positively. For that, we must embrace frugality as a core value, ”Munjal said. Unacademy declined to comment on the internal memo.