The spate of layoffs continues in the edtech sector, with SoftBank-backed Unacademy being the latest to join the league. Recently, India's most valuable edtech company, Byju's, laid off close to 2500 employees, while another edtech unicorn Vedantu fired around 700 employees.
Unacademy announced that it was firing around 350 employees, 10 per cent of its 3,500-strong workforce. This is the fourth round of layoffs by edtech unicorn this year alone. It handed out pink slips to 150 employees in June and fired around 700 people in April, which included permanent and contractual staffers.
The cracks in the company started showing when it decided to restructure PrepLadder in March and lay off over 100 employees from this team. Unacademy acquired PrepLadder, a Chandigarh-based post-graduate medical entrance exam preparation platform, in 2020 for $50 million.
Gaurav Munjal, Unacademy's co-founder and chief executive officer (CEO), announced the latest layoff in an internal email to employees. He claimed that this move was necessitated due to a need to cut costs during harsh economic conditions. The company had to keep optimising its operations and build efficient systems for leaner and unprecedented times.
"We are no strangers to the harsh economic conditions that everyone is witnessing these days. These are very difficult times for the technology ecosystem. And things are getting worse with each passing day," Munjal wrote.
Winter will get worse. Get to profitability asap. And then grow from there. Stop all unnecessary spends.— Gaurav Munjal (@gauravmunjal) November 4, 2022
Focus on building great Products and organic Traction Channels.
Last week, Munjal tweeted that the company's cash burn had come down from $20 million a month to $7 million a month, and it will go down further. Mindful that the edtech industry was battling headwinds, in July, he had tweeted that his company had slashed its performance marketing spends from Rs 18 crore a month to Rs 2 crore, though he had added that this move had not impacted the company's growth.
At the same time, he had undertaken cost-cutting measures, including the decision to stop spending on IPL advertisements from next year.
Interestingly, Munjal had assured employees there would be no more layoffs in another internal note to staffers in July. In his latest email, he said, "I want to apologise to everyone sincerely since we made a commitment of no layoffs in the organisation but the market challenges have forced us to reevaluate our decisions. Funding has significantly slowed down and a large portion of our core business has moved offline."
He added that those laid off would receive severance pay equivalent to their notice period, two months' salary, medical insurance coverage for an additional year and dedicated placement and career support.
Bengaluru-based startup Unacademy was valued at $3.4 billion last year after a $440 million funding infusion led by Singapore's Temasek. The company is backed by several investors, including SoftBank, General Atlantic and Meta.