Physics Wallah CEO Alakh Pandey (right) and company co-founder Prateek Maheshwari (left).
Physics Walla
Physics Wallah, an Indian education technology startup, announced on Friday that it has raised $210 million in funding as it looks to expand its business as the industry struggles, partly through acquisitions.
The financing was led by Hornbill Capital, with participation from Lightspeed Venture Partners, GSV and WestBridge. This round of financing valued the company at US$2.8 billion, a significant increase from the last valuation of US$1.1 billion.
Founded in 2020, Physics Wallah is one of the many educational technology or education technology companies in India that provides free and paid courses for various competitive exams in India. The company aims to differentiate itself by offering courses that cost an average of less than $50 so that more children in disadvantaged areas of the country can access them.
“We're not built for 1% of the country or 1% of the world, we're built for the remaining 99%, the people who can't attend these advanced coaching courses… Now we're building for the different type of students to help,” CEO Alakh Pandey physicist Wallah told CNBC.
The company uses a freemium business model, hosting courses on YouTube for free. For students who want more features, such as assignments and quizzes, paid services are available.
The company said its revenue increased 250% year-on-year in the fiscal year ending in March 2024, and Pandey said he expected EBITDA to be “the highest in absolute terms” this fiscal year. Earnings before interest, taxes, depreciation and amortization (EBITDA) is a measure of a company's profitability.
Pandey said the company is open to acquisitions as long as it gives them access to new content and users.
“If the merger is based on different geographies that we cannot serve and it caters to content and community first, then we are open to that,” Pandey said.
The CEO pointed to the equity investments it has made. Last year, Physics Wallah acquired a 50% stake in Xylem Learning, an edtech company based in the southern Indian state of Kerala.
Indian education technology issues
Pandey and his co-founder Prateek Maheshwari said the company is focused on a number of key trends, including the push for hybrid teaching in online and physical classrooms, and more education in India's villages, towns and smaller cities. Broad network penetration. All of this helps children from poor families gain access to education.
India's edtech boom began during the COVID-19 pandemic, with several companies looking to expand aggressively.
But that expansion has also led to some high-profile closures in the industry, including Byju, an edtech company once valued at $22 billion that nearly collapsed and faced bankruptcy. Multiple insolvency proceedings in India. The company's decline was attributed to factors including aggressive acquisitions, high marketing spending and poor management.
Discussing some of the failures in India's edtech space, Pandey said his company is focused on content and outcomes for students.
“If you watch the interviews or even read the headlines where you're talking about former actors, all they talk about is the crazy valuations they had, the money they raised and how much money they made,” Pandey told CNBC.
“Education is a different thing. It's not like any other startup where you can grow and talk about crazy valuations… Internally, you have to accept that you're actually trying to change the lives of students.”
Maheshwari also said in an interview with CNBC that despite the failures, the market is still growing.
Maheshwari said: “I don't think the market has shrunk. Some players have not performed well post-Covid… but the number of learners is increasing year by year.”
Talking about the future of Physics Wallah, Pandey said there will be an initial public offering but would not give a timetable.
“The IPO is what we are going to do. We want the company to have strong governance and we are working hard to achieve that, forming an independent board committee… It doesn't matter to us when we do the IPO, we are running the company like a public company,” Pandey said.