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NEW DELHI :
Unacademy must focus on profitability at all costs and the staff must learn to work under constraints as the funding winter is here, Gaurav Munjal, co-founder and chief executive officer of the edtech startup, said in a email to employees.
“We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months," Munjal wrote.
“We must survive the winter. We have a different iconic goal this time. The goal is of profitability. The goal is of generating FCF (free cash flow)," he said.
Munjal’s email comes amid the liquidity squeeze already felt in the startup ecosystem that has prompted some startups, including Unacademy, to lay off staff in the past weeks to cut costs. Last month, Unacademy, operated by Sorting Hat Technologies Pvt Ltd, laid off nearly 600 employees comprising nearly 10% of its workforce. The previous month, it had let go more than 100 employees from its PrepLadder team amid “restructuring" of the organization.
Munjal explained that some of the steps taken by the edtech startup to achieve profitability include reduction of brand marketing budget and removal of incentives to educators that are not linked to revenue.
Besides, its businesses such as Relevel (hiring tests platform) and Graphy (course platform for course creators, coaches and teachers) must become “extremely mindful of burn", Munjal said. Employees should travel only when absolutely needed, he said.
Munjal highlighted that every test preparation category of Unacademy must be profitable in the next three months and its centres should be profitable in the current financial year itself.
He also harked back to 2018-19 when it was tough to raise money but the startup had 30 months of runway. “Then after 18 rejections, we raised our Series D round," he reminisced. He also underlined that he doesn’t remember a time when Unacademy was ever resource constrained. “However, now we must change our ways," he noted.
Unacademy is valued at $3.44 billion and counts global venture capital (VC) firms, including Sequoia Capital, Tiger Global Management, and SoftBank as its backers.