Physics Wallah CEO Alak Pandey (right) and the company’s co-founder Prateek Maheshwari (left).
Physics Walla
Indian education technology startup Physics Wallah said on Friday it has raised $210 million to expand, including through acquisitions, amid a struggling education sector.
The financing was led by Hornbill Capital, with participation from Lightspeed Venture Partners, GSV and WestBridge, and values the company at $2.8 billion, up from its previous valuation of $1.1 billion.
Founded in 2020, Physics Wallah is one of many educational technology (edtech) companies in India offering free and paid courses for various competitive exams across the country. The company aims to differentiate itself by offering courses with an average cost of less than $50, making them accessible to more children in underserved areas of the country.
“We’re not built for 1 percent of the country or 1 percent of the world, we’re built for the other 99 percent, the people who can’t afford these fancy coaching classes. We’re now getting all kinds of students,” Physics Wallaah CEO Alak Pandey told CNBC in an interview.
The company operates a freemium business model, offering free courses on YouTube, with paid plans available for students who want more functionality, such as homework and quizzes.
The company said its revenue for the fiscal year ending March 2024 rose 250% from the previous year, and Pandey said it expects its EBITDA, a measure of a company’s profitability that measures earnings before interest, tax, depreciation and amortization, to be its “highest absolute figure ever” this fiscal year.
Pandy said the company is open to acquisitions as long as they give it access to new content and users.
“As far as consolidation goes, if it’s based in a different geography that we can’t serve and caters to content and community first, we’re open to it,” Pandy said.
The CEO was referring to equity investments the company has already made: Last year, Physix Walaah acquired a 50% stake in Xylem Learning, an education technology company headquartered in the southern Indian state of Kerala.
India’s Educational Technology Issues
Pandey and co-founder Prateek Maheshwari said the company is focused on several key trends, including the push for hybrid education — both online and in-person classrooms — and the rise of internet penetration in India’s villages, towns and smaller cities, all of which are helping to give more children from disadvantaged backgrounds access to education.
The edtech boom in India began during the Covid-19 period when several companies looked for aggressive expansion.
But this expansion has led to some high-profile bankruptcies in the sector, including education technology company Byju, once valued at $22 billion, which nearly went bankrupt The company has filed for multiple bankruptcy proceedings in India, and its decline has been blamed on aggressive acquisitions, heavy spending on marketing and mismanagement, among other factors.
Discussing some of the failures in the Indian education technology sector, Pandey said his company focuses on the content it delivers and outcomes for students.
“If you read the interviews and headlines of past actors that you’re talking about, all they talk about is the crazy valuations they had, the capital they raised, the money they made,” Pandy told CNBC.
“Education is different. It’s not like other startups that can grow and talk about crazy valuations. Deep down, you have to embrace that you’re actually working to change students’ lives.”
Maheshwari, who also spoke to CNBC, said that despite the failure, the market is still growing.
“I don’t think the market has shrunk. Though a few players are struggling post-Covid, there has been an increase in learners year-on-year,” Maheshwari said.
On the future of PhysixWala, Pandey said an IPO is on the cards but no specific timeline has been decided.
“An IPO is what we will do. We want to institute strong governance in the company and are working on that, including forming an independent board. When the IPO happens is not that important to us. We are running the company like a public company,” Pandey said.
