Lido asks staff to quit as it winds down ops
PremiumQuality Tutorials Pvt. Ltd, which runs the edtech platform for Class V-XII students, sought the resignations earlier this month because it is looking to wind down operations amid a funding crunch
MUMBAI : Over 1,200 employees of edtech platform Lido Learning have been asked to hand in their resignations, according to three people aware of the matter, prompting backer Ronnie Screwvala to accuse its founders of keeping investors “under-informed".
Quality Tutorials Pvt. Ltd, which runs the edtech platform for Class V-XII students, sought the resignations earlier this month because it is looking to wind down operations amid a funding crunch, said the people cited above.
Lido Learning founder Sahil Sheth told a town hall meeting on 5 February that the company is facing a financial crisis and will not be able to pay salaries for February, three employees said.
Sheth said employees may get their salaries in the next three months and that the company is planning to sell its assets to generate cash to pay dues, all three employees said on condition of anonymity.
Sheth added that the company would not be able to continue as a going concern, and thus it is winding down its operations, they said. All its over-1,200 employees were told to tender their resignations. The company did not issue any termination letters.
Ronnie Screwvala, whose Unilazer Ventures recently invested $10 million in Lido Learning, said he heard that the company was looking at a merger and acquisition just three weeks ago.
“(I am) therefore shocked to hear this," Screwvala said, adding that as an investor, he has “zero oversight on the company" and was never on Lido Learning’s board.
“Unfortunately, the founders kept all investors quite under-informed on the status and reality. Critical is that parents and students should not suffer at all, and to that end, I understand other K-12 (kindergarten to Class XII) edtech companies are looking to step in and adopt the students. What has happened is unacceptable," Screwvala said.
To be sure, Lido Learning’s website is still live, and the company is still accepting calls. But the people cited above said it is as good as shut. Emails and messages sent to Lido Learning and Sheth remained unanswered at press time.
Founded in April 2019, Lido Learning operates a platform that sets up online tuitions. Apart from Screwvala, it counts Anupam Mittal and Vijay Shekhar Sharma among its backers. The company has raised over $20 million to date. In September, Lido Learning said it was on track to reaching a $100 million run rate by the end of the current financial year.
Screwvala has made several investments in edtech firms in his personal capacity and through Unilazer Ventures Pvt. Ltd, a private investment company he founded in 1991. Screwvala co-founded UpGrad Education Pvt. Ltd.
Alibaba-backed BACE Ventures; Picus Capital; 9 Unicorns; Madhur Deora, chief financial officer of Paytm; Mukesh Bansal, co-founder of Cure.fit; and founder of Mensa brands Ananth Narayanan have also invested in Lido Learning.
Lido Learning’s failure comes when the edtech segment in India has seen exponential growth as demand for remote learning and digital learning applications surged following pandemic-induced lockdowns. Investors have poured millions of dollars into edtech firms.
India has minted six unicorns—startups with over $1 billion in valuation—in the edtech space, but most of them are yet to turn profitable because of high customer acquisition costs, including marketing and promotional activities. However, Lido Learning was trying to trim these costs, said Rishabh Kumar, assistant marketing manager at Lido Learning.
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Kumar said the company was cutting its ‘per client fee’, which is paid to marketing employees who get customers or leads. Kumar claims he used to get ₹65 per lead, but this was cut to as low as ₹12 in February. “I was getting a feeling that all is not well with the company because we were seeing our fees per lead reducing significantly. But I was not expecting anything like this to happen suddenly. Sahil Sir in the morning (on 5 February) said that ‘I do not want to waste your day, so I am doing this the first thing in the morning’, and that’s how we were told that the company is shutting down and we won’t be getting our salaries," Kumar said.
The three employees cited above said the company is still accepting payments from some customers. A mother of a CLass VI student said on condition of anonymity: “We had taken an external financing option from Bajaj Finance for paying the subscription fees, and we had sent them multiple emails even before the news of the company getting shut was made public as we were finding the courses not so useful. The amount gets debited every month still, and there’s no clarity."
Investors, meanwhile, are holding Lido Learning’s management responsible for the collapse. An investor on Lido Learning’s cap-table, who declined to be named, said the company’s leadership could have handled the situation better. “The warning signs were clear enough, but enough attention was not paid," the investor said, asking not to be named. “Investors supported the company through multiple rounds and did their best to salvage the situation, including helping to raise external rounds as well, when no one was willing," the investor added.
There were also discussions held to sell the business to a peer, the investor said, without giving details. “Something could have been done if it had been timed better," the person added.
“Unfortunately, some founders prefer to kill the baby than allow someone else to raise it."
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