Unacademy in talks to raise $150 million led by SoftBank and Deal likely to value the company at $1.3 billion, catapulting it to unicorn status.

Education technology startup Unacademy is finalising a deal to raise around $150 million in fresh equity funding led by Japanese conglomerate SoftBank, which will lend the Bengaluru-based firm a pre-money valuation of $1.3 billion, sources in the know of the matter told ET.

The potential funding comes on the back of Unacademy’s strong growth caused by the spike in the number of online learners in India due to the Covid-19 pandemic. The company claims to have garnered 200,000 subscribers now, compared to 90,000 in February. The uptick had resulted in an 80% growth in revenues in April, as schools and offline tuition centres remain shut.

The fundraising, when it concludes, will be significant as it will mark the first fresh investment by the Masayoshi Son-led SoftBank in an Indian firm since it backed eyewear retailer Lenskart in December 2019.

The technology investor has in the past year slowed down its pace of new bets globally cutting fewer cheques following the debacle of coworking startup WeWork. SoftBank Vision Fund’s other big portfolio companies, taken early on in India, like budget hotel brand Oyo and digital payments platform Paytm have also been under the scanner due to heavy losses clocked by these businesses.

Unacademy had last picked up $110 million in funding from Facebook and private equity major General Atlantic in February this year, at a valuation of $510 million. Sources also told ET that the company’s existing investors will also participate in Unacademy’s latest funding round alongside SoftBank, but did not share exact details on who they could be. Sequoia Capital, Nexus Venture Partners, Steadview Capital and Blume Venture are it’s early backers.

While Unacademy did not respond to ET’s emails seeking comment until press time on Friday, a SoftBank spokesperson said the firm would not comment on market “speculation”.

MoneyControl had first reported on SoftBank’s plans to invest in Unacademy on July 14.

The investment led by SoftBank will make Unacademy India’s second most valuable edtech firm after Byju’s, which recently raised capital from Mary Meeker’s Bond Capital at a valuation of $10.5 billion. Unacademy will also pip rival Vedantu, whose valuation had risen to $600 million after it raised $100 million led by Coatue Management in July.

These investments in leading Indian edtech firms also come at a time when there is a wave of consolidation in the sector. Unacademy itself recently acquired Chandigarh-based PrepLadder in a $50 million cash and stock deal. Byju’s too recently announced the acquisition of WhiteHat Jr for $300 million to get a foothold into the US edtech market. Vedantu too recently invested $2 million in online instant doubt-solving app InstaSolv.

Edtech is one among the handful of Internet sectors that has benefitted from the Covid-19 pandemic, with all major players – Byju’s, Vedantu, Unacademy, WhiteHat Jr, reporting solid gains as learners switched to online classes. Even after the passing of the pandemic, edtech firms are hopeful of higher retention of learners who have gotten a taste of online classes.

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SoftBank Vision Fund CEO Rajeev Misra had told ET in April this year, that the firm was looking to make 15-20 investments over the next three months, and that it was actively scouting for investments in India at the right valuation.

Earlier this week, the SoftBank Group reported a record net profit of $11.8 billion in the April-June quarter due to the partial sale of its stake in US carrier Sprint to T-Mobile and recovery of technology startup valuations that boosted returns of its $100 billion Vision Fund.

Story published on : tech.economictimes.indiatimes