BENGALURU: Edtech platform Vedantu, which turned unicorn in September last year, has laid off 7% of its workforce - 424 employees - as it is expecting fund shortage in the coming quarters. The start-up had raised $100 million in September 2021, and it was valued at $1 billion.
Its co-founder and CEO Vamsi Krishna told employees that currently, the external environment is tough. “War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters,” he said.
With Covid tailwinds receding, schools and offline models opening up, Krishna said the hyper-growth of 9X that Vedantu experienced during the last two years will also get moderated.Recently, another edtech unicorn Unacademy laid off 600 employees or 10% of its workforce. Three months ago, Lido Learning, which faced severe financial constraints, laid off over 200 employees.
The edtech industry, which was valued at $750 million in 2020, has been facing severe financial constraints, due to slowdown in funding. Since offline tuitions and schools are now opening up, a few edtech companies are also foraying into offline models.
Unacademy on Wednesday announced its foray into the offline model at its new centres. Its first Unacademy centre will open in Kota by next month, followed in Jaipur, Bengaluru, Chandigarh and Ahmedabad, among others.
Vedantu is also experimenting with the hybrid model that will help the start-up explore offline-online learning models. Earlier, Byju’s had said that it will be launching 500 offline tuition centres by the end of this year.
Edtech companies that leveraged the COVID-19 tailwinds, and who were positioned as classroom learning substitutes are facing a massive erosion of subscribers and revenue with the opening of schools and colleges. The valuation game is over, and the investor community is past the FOMO (fear of missing out) period, Karanvir Singh, founder, Pariksha, a vernacular edtech platform, told TNIE.
Edtech firms’ constraints
Edtech companies that leveraged the COVID-19 tailwinds, and who were positioned as classroom learning substitutes are facing a massive erosion of subscribers and revenue with the opening of schools and colleges