Alakh Pandey (R), CEO of Physics Wallah, together with the corporate’s co-founder Prateek Maheshwari (L).
Physics Wallah
Indian education technology startup Physics Wallah announced on Friday that it had raised $210 million because it looks to expand its business, partially via acquisitions, amid troubles within the sector.
The funding, led by Hornbill Capital, and involving Lightspeed Enterprise Partners, GSV and WestBridge, values the corporate at $2.8 billion, a big increase from its last valuation of $1.1 billion.
Physics Wallah, founded in 2020, is certainly one of India’s many education technology, or ed-tech firms, that gives free and paid-for courses for various competitive examinations in India. The corporate goals to distinguish itself by offering courses that on average cost lower than $50, in an effort to be accessible to more kids in poorer parts of the country.
“We will not be built for 1% of the country or 1% of the world, we’re built for the remaining 99%, those that cannot go to those fancy coaching classes … now we enable different kinds of scholars,” Alakh Pandey, CEO of Physics Wallah, told CNBC in an interview.
The corporate runs on a freemium business model, hosting courses at no cost on YouTube. For those students who want more features similar to homework and tests, there’s a paid offering.
The corporate said its revenue grew 250% year-on-year within the fiscal yr ended March 2024 and Pandey said he expects the “highest absolute” EBITDA in the present fiscal yr. Earnings before interest, taxes, depreciation, and amortization, or EBITDA, is one measure of profitability utilized by firms.
Pandey said the corporate is open to acquisitions provided it gives them access to latest content and users.
“Consolidation, we’re open to it if it’s based on different geography that we cannot serve to, and if it caters to content and community first,” Pandey said.
The CEO pointed to the equity investments it has already made. Last yr, Physics Wallah brought a 50% stake in Xylem Learning, an ed-tech company headquartered in Kerala in south India.
India ed-tech issues
Pandey and his co-founder Prateek Maheshwari said that the corporate is targeted on some key trends including the push for hybrid — each online and in physical classrooms — and broader web penetration across villages, towns and smaller cities in India. All of this helps children from less-privileged backgrounds get access to education.
The ed-tech boom in India began through the Covid pandemic when several firms looked to expand aggressively.
But that expansion also led to some high-profile collapses within the sector, including ed-tech firm Byju — once valued at $22 billion — which has all but collapsed and is facing multiple insolvency proceedings in India. Its fall has been attributed to aspects including aggressive acquisitions, high spend on marketing and mismanagement.
Discussing a few of the failures within the ed-tech sector in India, Pandey said his company is targeted on the content it offers and the outcomes for college students.
“In case you see interviews and even read the headlines of previous actors that you just’re talking about, all they discuss is the crazy valuation they’ve, the funds they’ve raised how much money they’ve made,” Pandey told CNBC.
“Education is different thing. It isn’t like several other startup you could grow and discuss crazy valuation … at heart you will have to just accept that you just are literally working to vary the life of scholars.”
Maheshwari, who also spoke to CNBC, said that despite the failures, the market continues to be growing.
“I don’t think the market has shrunk. A few players have struggled to perform post-Covid … however the learners are increasing year-on-year,” Maheshwari said.
Speaking about Physics Wallah’s future, Pandey said an initial public offering will occur, but would not be drawn on a timeline.
“An IPO is something that we’ll do. We would like to have a robust governance in the corporate, we’re working on that, forming a board of independent directors … it is not that necessary for us when the IPO will occur, we’re running the corporate like a public company,” Pandey said.
