PhysicsWallah seeks $250m funding for $3.3bn valuation goal

• ByStartup Story Team     |    March 23, 2023

Edtech start-up PhysicsWallah is reportedly in the early stages of securing a significant funding round, aiming to raise a minimum of $250 million at a valuation three times higher than its current worth. The potential funding comes at a time when the edtech industry is facing slower growth due to the reopening of physical schools, colleges, and tuition centres. 

Sources familiar with the matter said that PhysicsWallah, the edtech unicorn led by popular YouTube teacher Alakh Pandey, is seeking to raise its company valuation to $3.3 billion, a significant increase from its current worth of $1.1 billion. The sources, who wished to remain anonymous, also revealed that PhysicsWallah is currently in talks with several private equity (PE) investors. The company’s current investors, GSV Ventures and WestBridge Capital, are also expected to increase their investment in the company.

According to one of the sources cited earlier, PhysicsWallah has been actively seeking a new funding round since the beginning of the year. The exact size of the round and the resulting valuation are not yet determined, as the talks are still in the early stages.

 However, the source stated that the company is looking to raise at least $250 million, not because it requires the funds, but rather to increase its valuation and potentially pursue mergers and acquisitions (M&As). 

Despite being well-capitalised and profitable, PhysicsWallah intends to set a valuation benchmark for itself if it secures funding in the current market environment. Both PhysicsWallah and GSV Ventures declined to comment on the matter, and no response was received to inquiries made to WestBridge Capital.

 

PhysicsWallah, India’s largest and only profitable edtech start-up, saw its operating revenue increase by 10 times to Rs 232.5 crore in the fiscal year 2021-22. In the same period, the company recorded a profit of nearly Rs 100 crore. 

In an interview last year, CEO Alakh Pandey stated that the company anticipates its revenue to exceed Rs 1,200 crore in the current fiscal year 2022-23, with an EBITDA margin ranging from 40-45 percent. If PhysicsWallah can achieve this level of aggressive growth, it would be the only edtech unicorn in India to attain over 100 percent revenue growth. In comparison, its competitors Unacademy and Vedantu are projecting flat to minimal growth this year.

Despite the massive slowdown in growth experienced by edtech start-ups in India due to the reopening of schools, colleges, and physical tuition centres, PhysicsWallah is currently considering fundraising and pursuing aggressive growth plans. 

This contrasts with the cost-cutting measures taken by most edtech unicorns, including the heavily funded Unacademy, Byju’s, and Vedantu, who have let go of over 1,000 employees to extend their runway and reduce expenses in response to the significant slowdown in funding to India’s start-up ecosystem.

The most significant fundraising effort by an edtech firm in India was Byju’s $250-million round in October, but the company’s flat valuation of $22 billion was not increased. 

In comparison, PhysicsWallah, established by Alakh Pandey and Prateek Maheshwari in 2020, received a $100 million investment from GSV Ventures and WestBridge Capital in June of the same year, valuing the company at $1.1 billion. The funds were allocated to business expansion, branding, opening additional offline learning centres, and adding more courses, according to the firm.

Follow Startup Story