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Indian Ed-Tech Startup Physics Wallah Secures $2.8 Billion Valuation Amid Industry Setbacks

Alakh Pandey (R), CEO of Physics Wallah, along with the company’s co-founder Prateek Maheshwari (L). Image: Physics Wallah
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As competitors struggle, Physics Wallah charts its own course through acquisitions and a student-centric approach

Indian ed-tech startup Physics Wallah announced on Friday that it had secured $210 million in a new funding round, raising its valuation to $2.8 billion. This marks a significant leap from its previous valuation of $1.1 billion, even as the broader Indian ed-tech sector faces severe challenges.

The funding round was led by Hornbill Capital and included prominent investors such as Lightspeed Venture Partners, GSV, and WestBridge. This infusion of capital will fuel the company’s growth ambitions, including potential acquisitions that align with its vision to expand into new geographies and content areas.

“We are not built for 1% of the country or 1% of the world; we are built for the remaining 99%, those who cannot go to these fancy coaching classes,” said Physics Wallah’s CEO, Alakh Pandey, in an interview with CNBC. “We aim to empower different kinds of students and provide access to affordable education,” he added.

Physics Wallah’s model operates on a freemium basis, where students can access a variety of courses for free on YouTube. For those seeking more personalized features, such as homework and assessments, there is a paid version. The company’s revenue grew by 250% year-over-year for the fiscal year ending March 2024, with Pandey anticipating even stronger profitability in the current fiscal year.

Sustained Growth Despite Industry Setbacks
Physics Wallah’s rapid rise comes in stark contrast to the broader challenges facing India’s ed-tech industry. The sector experienced a boom during the COVID-19 pandemic, but rapid expansion and aggressive marketing strategies have since led to the downfall of several high-profile players. Byju’s, once valued at $22 billion, has almost entirely collapsed and is now facing multiple insolvency proceedings.

Pandey attributes his company’s success to its focus on quality content and positive student outcomes, rather than inflated valuations. “If you look at other players, they always talked about their crazy valuations and how much money they had raised. But education is different. It’s about changing the lives of students,” he explained.

Pandey’s approach has resonated with both investors and students. Physics Wallah differentiates itself by offering low-cost courses, averaging less than $50, making them accessible to students in poorer, underserved regions across India.

Acquisitions and Expansion Plans
As part of its growth strategy, Physics Wallah has been exploring acquisitions that will expand its content offerings and user base. Last year, the company acquired a 50% stake in Xylem Learning, an ed-tech firm based in Kerala, South India. Pandey indicated that future acquisitions would focus on new geographies and strengthening the company’s content and community offerings.

“Consolidation is something we are open to, but only if it serves content and community first,” Pandey said. The CEO emphasized that any potential deals would need to align with Physics Wallah’s core mission of providing accessible, high-quality education to underserved students.

Co-founder Prateek Maheshwari echoed this sentiment, adding that the company remains focused on key trends like the growing demand for hybrid education models (a blend of online and physical classrooms) and increased internet penetration in rural and semi-urban areas of India. This, he said, is critical to enabling children from less-privileged backgrounds to access education.

Challenges Facing Indian Ed-Tech
While Physics Wallah continues its upward trajectory, other Indian ed-tech firms have struggled to maintain their footing post-pandemic. Byju’s aggressive acquisition strategy and high marketing expenses have contributed to its downfall, serving as a cautionary tale for other ed-tech players.

“Some companies tried to grow too fast without focusing on the core values of education,” Maheshwari said. “Despite the failures in the sector, we believe the market is still expanding, with more learners entering the ecosystem year-on-year.”

Pandey remains optimistic about the future of ed-tech in India, attributing the success of Physics Wallah to its student-first approach. “At the heart of it, you have to remember that we are working to change students’ lives. That’s our primary focus,” he noted.

Looking Ahead: IPO and Long-Term Plans
Looking toward the future, Physics Wallah has its sights set on an initial public offering (IPO), although Pandey remained non-committal about a specific timeline. “We are building the company with the structure and governance of a public company,” Pandey said, adding that the firm is in the process of forming a board of independent directors to strengthen its governance.

“An IPO will happen, but it’s not about when for us. We are focused on running the company with strong governance and a long-term vision,” Pandey said.

Founded in 2020, Physics Wallah offers both free and paid courses aimed at helping students prepare for competitive examinations in India. As the company continues to grow, its focus on accessible pricing and community-driven content sets it apart from competitors who have struggled in a rapidly evolving and challenging industry landscape.

By maintaining its commitment to affordability and student outcomes, Physics Wallah has positioned itself as a leader in India’s ed-tech sector, with plans to expand its reach and impact in the coming years.

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