Anamika Dey, editor
Brief news
- Physics Wallah raised $210 million, increasing its valuation to $2.8 billion, to expand operations and enhance accessibility to education for underprivileged students in India.
- The company operates on a freemium model, offering free courses on YouTube and paid options for additional features, reporting a 250% revenue increase year-over-year.
- CEO Alakh Pandey emphasized prioritizing content quality and student outcomes over high valuations, with plans for an IPO and potential acquisitions to broaden their reach.
Detailed news
Physics Wallah, an Indian education technology startup, disclosed on Friday that it had raised $210 million in order to expand its operations, including through acquisitions, in response to industry challenges.
The company is valued at $2.8 billion, a substantial increase from its previous valuation of $1.1 billion, following the funding round anchored by Hornbill Capital and involving Lightspeed Venture Partners, GSV, and WestBridge.
Physics Wallah, established in 2020, is one of the numerous education technology (ed-tech) companies in India that provides both free and paid courses for a variety of competitive examinations. In order to increase accessibility to children in impoverished regions of the country, the organization endeavors to distinguish itself by providing courses that average less than $50.
“We are not designed for the 1% of the country or the 1% of the world; rather, we are designed for the remaining 99%, who are unable to attend these high-end coaching classes.” In an interview with CNBC, Alakh Pandey, CEO of Physics Wallah, stated, “We are now able to accommodate a variety of students.”
Hosting courses for free on YouTube, the organization operates under a freemium business model. There is a paid option available for students who require additional features, such as assignments and exams.
The company reported a 250% year-over-year increase in revenue during the fiscal year ending March 2024. Pandey anticipates that the current fiscal year will see the “highest absolute” EBITDA. Companies utilize EBITDA, or earnings before interest, taxes, depreciation, and amortization, as an indicator of profitability.
Pandey stated that the organization is amenable to acquisitions, provided that they grant them access to new content and consumers.
Pandey stated, “We are amenable to consolidation provided that it is based on a different geography that we are unable to serve and that it prioritizes content and community.”
The CEO cited the equity investments that the company has already made. Physics Wallah acquired a 50% stake in Xylem Learning, an ed-tech company located in Kerala, south India, last year.
India’s educational technology challenges
Pandey and his co-founder Prateek Maheshwari stated that the company is currently concentrating on several critical trends, such as the expansion of internet penetration in villages, municipalities, and smaller cities in India, as well as the promotion of hybrid education in both online and physical classrooms. This all contributes to the education of children from underprivileged circumstances.
Several companies sought to expand aggressively during the Covid pandemic, which sparked the ed-tech growth in India.
However, this expansion also resulted in several high-profile collapses in the sector, such as the ed-tech firm Byju, which was once valued at $22 billion. Byju is currently facing multiple insolvency proceedings in India and has all but collapsed. Factors such as mismanagement, excessive marketing expenditures, and aggressive acquisitions have contributed to its decline.
Pandey stated that his organization prioritizes the content it provides and the results it achieves for students when discussing failings in the Indian ed-tech sector.
Pandey stated to CNBC, “If you observe interviews or read the headlines of previous actors that you are discussing, they exclusively discuss their outrageous valuations, the funds they have raised, and the amount of money they have earned.”
“Education is a distinct entity.” It is not comparable to any other venture in that it is possible to expand and discuss exorbitant valuations… at the core, you must acknowledge that you are genuinely striving to alter the lives of students.
Maheshwari, who also spoke to CNBC, stated that the market is still expanding, despite the setbacks.
“I am of the opinion that the market has not contracted.” Maheshwari stated, “A few players have encountered difficulties in their performance following the Covid-19 pandemic; however, the number of learners is expanding annually.”
Pandey, when discussing the future of Physics Wallah, stated that an initial public offering will occur, but he declined to provide a specific timeline.
“We intend to conduct an initial public offering.” We are currently in the process of establishing a board of independent directors in order to establish a robust governance structure within the company. The timing of the IPO is of secondary importance to us; we are conducting business in a manner that is consistent with that of a public company,” stated Pandey.
Source : CNBC News
