Indian digital education company Unacademy closed its acquisition by rival upGrad at a valuation of 19.55 billion rupees, or approximately $206 million, in a deal about 94% below Unacademy’s highest recorded valuation of $3.44 billion in 2021.
The deal, executed entirely through a share exchange, grants Unacademy shareholders shares in upGrad, while angel investors received their proceeds in cash upon closing. The two parties first announced the deal in March, before announcing its closure approximately six months later in a post on X written by Unacademy co-founder and chief executive, Gaurav Munjal.
A low-value deal despite cash and revenue
Munjal said the company had approximately 9 billion rupees, or $94.8 million, in its accounts and generated annual revenue of about 4 billion rupees, or $42.13 million. He added that most of its businesses were profitable or close to profitability, and that it had the option to continue as an independent company.
Nevertheless, the leadership team believed that reaching sufficient scale for growth or an initial public offering would require expanding into additional educational fields. According to two sources familiar with the deal, upGrad, which has a larger presence in in-person education, offered a potential path for that expansion. The sources did not attribute the deal to a single direct financial reason, while Munjal’s statement that no one was forcing the company to sell reflects that the decision followed a strategic assessment of its growth path.
What is transferring to upGrad?
The deal includes the entire Unacademy group, including PrepLadder and Graphy, as well as language-learning app Airlearn. Unacademy will retain its brand, while Munjal will continue in his role and lead digital operations and Airlearn. There are no plans for layoffs, according to a person familiar with the deal, with the group comprising approximately 1,000 employees.
Airlearn, which is two years old, serves 10 million users in more than 150 countries. Munjal and Ronnie Screwvala, upGrad’s co-founder and chairman, are expected to decide within approximately six months whether the app will continue as an internal part of the group or raise external funding. Airlearn received investment offers late last year, but its funding plans were put on hold as acquisition talks progressed.
Why does this news matter?
The deal effectively reveals the scale of the correction that affected Indian digital education companies after the end of the lockdown boom that drove demand for online lessons to record levels in 2020 and 2021. Unacademy spent heavily during that period to compete with companies including Byju’s, then was forced, after in-person classes returned and demand declined, to cut costs, lay off employees and restructure parts of its business.
Near-term profitability or holding cash does not mean that a high valuation is sustainable; the deal ties the company’s value to its ability to reach a broader scale, not to its previous funding peak. Unacademy raised approximately $880 million across 13 funding rounds, making the transition to a $206 million deal a clear example of the gap between the capital the company raised and the value the market accepted at exit.
Airlearn’s future remains one of the key open questions, particularly because the decision to keep it internal or fund it externally has not yet been settled. Retaining Unacademy’s brand and leadership, and having no plans for layoffs, does not on its own prove that the integration will succeed; upGrad will need to expand the scale of the business while maintaining the cost discipline that helped Unacademy approach profitability.