13 highlights
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In the 21 months to 30 September 2021, Indian edtech firms have attracted nearly $6 billion in venture capital and private equity funding, according to data from Venture Intelligence.
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Two-year-old Scaler Academy is trying to solve the critical employability problem among India’s engineering graduates and is in the middle of a nice run. It is cash-flow positive, has recorded a 200% rise in revenues from pre-pandemic levels and, according to co-founder Abhimanyu Saxena, is looking to expand globally.
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“Unacademy wanted to fund Scaler, which went to Tiger instead. So now Gaurav wants to build its competitor,” says one person with knowledge of the matter, requesting anonymity.
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Acquisitions build a perception that the company is building for the future. That it has found solutions for inherent issues in the sector. But even the best business minds can solve only so many problems. In pursuing everything, entrepreneurs often end up solving nothing, making wrong bets and putting their most ambitious projects in jeopardy. So the question to ask here is this: has Munjal lost the plot in his desperate bid to overtake Byju’s? Will Unacademy be able to pull off another expansion/pivot?
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According to “National Employability Report: Engineers, 2019”, a report by human resources consultancy firm SHL, only 20% of India’s engineering graduates are employable. Only around 3% possess skills in artificial intelligence, machine learning, data engineering and mobile technologies, which are the cornerstones of the global job market today.
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“We found two problems with the ISA model. One, it wasn’t a level playing field. And second, the focus changed from learning to getting hired,” says Saxena.
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The truth is also that the core test prep product is a horrible business to be in. It has no growth and only a limited market. So the company has to focus on adjacent areas.
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“Their core business is stagnating, if nothing else,” says a second edtech executive, also requesting anonymity.
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However, at less than 1, Unacademy’s ratio of lifetime value of the customer to customer acquisition costs (a key metric for a number of consumer internet companies) is the real cause for concern. Investors, it seems, are ignoring this right now as they keep putting in money in Unacademy. The question is, why?
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Munjal acquires companies at a very early stage, sometimes even before they have found a product-market fit, and has a habit of making pivots fast. To keep changing the product, find a quick market fit and, if something clicks, scale quickly. Or move on.
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But let’s also be realistic and ask ourselves this question: How many pivots are too many for a business? And what happens to people who lose jobs during each pivot? Mastree is a classic example.
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Graphy, a product launched by Unacademy, is another example. In just about 16 months since its beta launch and about half a dozen pivots later, Graphy is radically different from what it was supposed to be.
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Does Unacademy have the chops to turn Relevel into its next growth engine? Or will Munjal run out of patience first and Relevel also meet the same fate as Mastree?