Indian edtech startup Unacademy cuts founders’ salaries and free meals for staff

unacademy cuts founders salary free meals

Amid rising struggles for India’s once-hot edtech market, SoftBank-backed Unacademy is taking drastic steps to prioritize profitability ahead of its initial public offering in two years.

In a companywide email shared via the Slack messaging system, Unacademy co-founder and CEO Gaurav Munjal said the firm had 28 billion rupees ($352 million) in the bank but felt the unicorn was “not efficient” with handling finances. To cut “unnecessary expenses,” CEO Munjal said Unacademy would implement pay cuts for founders and management, shut down its global test preparation business, impose travel restrictions on employees, and stop offering in-office complimentary meals and snacks.

The firm, which launched its global test preparation platform this year, will be shutting down its international operations in the coming days as it has not been able to achieve Profitability Mass Function (PMF), Munjal said.

Munjal’s latest message to employees has raised the alarm and stoked additional fears about the slowdown in India’s edtech industry. The COVID-19 pandemic came as a shot in the arm for the sector, leading to many funding rounds. However, startups are now feeling the fire: schools have reopened, inflation is rising, stocks have crashed, and the Russia-Ukraine war is having global repercussions.

The Unacademy group employs nearly 5,500 people and has started exploring the hybrid-retail model by opening offline centers. Earlier in May, Munjal, in a note, said the firm must survive the winter and keep profitability and free cash flow as the primary goals.