India’s edtech sector is undergoing a quiet but decisive consolidation phase. Last week, Unacademy cofounder Gaurav Munjal announced on X that upGrad had signed a term sheet to acquire a 100% stake in Unacademy.
This is one of the biggest consolidation moves since BYJU’S’ buyout of Aakash for $1 Bn at the peak of the edtech boom in 2021, when pandemic lockdowns forced education online, and venture capital flooded the sector.
The landscape today is a far cry from what it once was.
In the last few years, the edtech sector entered a prolonged correction phase. With online-only learning losing steam after 2022, VCs started tightening purse strings, and several companies were forced to pivot to hybrid or offline models. This was followed by an industry-wide crisis, resulting in layoffs and shutdowns.
Nearly five years after BYJU’S’ acquisition of Aakash, the Indian edtech ecosystem has started to resemble a two-horse race, led by PhysicsWallah and a potential combined upGrad-Unacademy entity in the making.
Now, before we dive deeper, let’s unpack the strategic logic behind the acquisition.
Founded in 2015 by Ronnie Screwvala, Mayank Agarwal, Palgun Kampalli and Ravijot Chugh, upGrad has largely positioned itself as a higher education and upskilling platform.
Its core offerings span data science, AI/ML, software development, cloud computing, and digital marketing, targeting both students and working professionals. The company has expanded into study abroad and early career enablement through acquisitions. But, one critical gap still remains in its portfolio, which is K-12 and test preparation.
In the Indian context, that gap is significant.
K-12 and competitive exam preparation are not just large segments; they account for a substantial share of education spending. Without a presence here, upGrad’s ability to capture long-term user value is constrained.
The acquisition of Unacademy addresses this gap. It provides upGrad with immediate access to a scaled K-12 and test pre business, eliminating the need for time-intensive and capital-heavy organic expansion.
More importantly, it allows the company to engage users earlier and retain them across multiple stages — school, entrance exams, higher education, and career progression.
It also aligns with upGrad’s intent to enter this segment. The company had previously submitted an expression of interest to acquire BYJU’S during its insolvency proceedings. Unacademy offers a cleaner and more viable route into the same space, with a robust brand and relatively fewer complications.
There’s also a strong financial angle to this deal.
Unacademy’s reported cash reserves of over $100 Mn (approximately INR 1,200 Cr) provide upGrad with an additional cushion for its IPO plans. In a funding environment where raising fresh capital is increasingly challenging, this liquidity could help sustain expansion while reducing dependence on external fundraising.
The implications of this deal extend beyond the two companies. It has the potential to reshape the competitive dynamics of the entire sector. How?
Well, on a combined basis, upGrad and Unacademy’s operating revenues stood at around ₹2,400 Cr in FY25. This places them in direct competition with PhysicsWallah, which reported an operating revenue of ₹2,887 Cr in the same period.
Beyond these players, the gap is significant.
BYJU’S, once the sector’s most dominant edtech player, is on the verge of insolvency. Others like LEAD School and Vedantu operate at a much smaller scale.
Traditional coaching giants present a mixed picture. Aakash Educational Services has seen revenue decline and losses surge, largely due to BYJU’S. Allen, too, has seen a dip in revenues and profitability.
Eruditus is a big player, but it operates in a narrower segment of executive education and global partnerships. It is also not a direct competitor in the consumer edtech market.
What this reveals is that scale is concentrating at the top, while the rest of the market is fragmenting or stagnating. The rest is an increasingly polarised landscape, where only a few players have the capital, scale and strategic flexibility to compete across segments.
Historically, edtech startups in India have remained domain-specific. Some focused on K-12 and test prep, while others specialised in upskilling and higher education. This equation is now changing, as reliance on a single vertical has proven to be risky.
With the addition of Unacademy, upGrad will move toward a full-stack model, which would allow it to create multiple monetisation touchpoints across different stages of education and employment.
This diversification is particularly important in a market where core segments are showing signs of volatility. Categories like JEE and NEET preparation have seen periodic slowdowns, highlighting the risks of overdependence on a single segment.
At the same time, the K-12 market remains the largest and the most stable segment. Estimates place its size at $95 Bn to $105 Bn, with projections of reaching up to $150 Bn by 2030. For any edtech startups aiming to build durable scale, participation in this segment is essential.
PhysicsWallah, while dominant in test prep, has also begun expanding into skilling through initiatives like PW Skills.
Despite the clear strategic logic, the road ahead is unlikely to be smooth. For starters, the upGrad-Unacademy deal has yet to be finalised.
Transactions of this scale often face last-minute hurdles, and the cautious language from Munjal in his tweet reflects that uncertainty.
Then, even if the acquisition goes through, the integration will be complex, as these companies operate with very different cultures, cost structures, and product strategies.
Aligning these elements will require significant execution discipline. This also means that some business verticals could be restricted or even shut down.
Profitability is another key area of concern. As upGrad prepares for a potential IPO, it will need to demonstrate strong unit economics and a clear path to profitability. Without this, valuation expectations may not be met, potentially delaying its listing plans or forcing it to raise additional funds.
The financial cushion from Unacademy’s cash reserves, while beneficial, also comes with caution, as it could offset some of its advantages.
Overall, the proposed upGrad-Unacademy deal underscores a broader structural shift, from fragmentation to concentration, from growth to efficiency, and from ambition to execution. In this new reality, scale, capital discipline, and product breadth are emerging as the defining factors of success. As things stand, PhysicsWallah and a combined upGrad-Unacademy appear best positioned to meet this new normal, effectively making the Indian edtech market a two-horse race.
Edited By Shishir Parasher
Creatives By Abhyam Gusai
The post Why India’s Edtech Sector Looks Like A Two-Horse Race appeared first on Inc42 Media.
