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As tech stocks crash globally and investors turn conservative, edtech unicorn Unacademy is increasing focus on profitability by significantly reducing marketing budget and slashing some incentives of educators, among other steps.
In an internal note to employees, CEO Gaurav Munjal said, “Tech stocks globally are crashing and burning due to tighter monetary policies and rising interest rates. We are looking at a time where funding will dry up for atleast 12-18 months. Some people are predicting that this might last 24 months. We must adapt.”
Focus on organic growth
He added that the goal is of profitability now and of generating free cash flow. In order to achieve this, the company will focus on organic growth channels. All incentives for educators that are not linked to revenue will be completely removed, team has been asked to travel only if absolutely needed, and meetings that can happen online should use the option. .
The company is also working on making every test prep category profitable in the next three months and aims at making Uncademy Centres (offline centres) profitable in FY23. Further, its’ subsidiary businesses like Relevel and Graphy have been asked to reduce their burn rate significantly.
“We flourished in an environment where resources and capital were abundant. There were times in 2018-19 when we found it difficult to raise money but the company felt no impact because as always we had 30 months of runway. And then after 18 rejections, we raised our Series D round. But now we must change our ways. Winter is here,” Munjal is added.
With the funding environment deteriorating, even well-funded start-ups have started downsizing teams. Last month, Unacademy laid off about 600 employees and contractual workers from its core test-prep business, citing role redundancy and performance. All laid-off employees were said to have received severance packages in accordance with their contracts. Unacademy has over 6,000 employees across the group, which makes these layoffs about 10 per cent of its workforce.
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