Indian ed-tech startup Physics Wallah secured a $2.8 billion valuation following a $210 million funding round, the company revealed on Friday. The round was led by Hornbill Capital, with Lightspeed Venture Partners, GSV, and WestBridge also participating. The funding marks a significant jump from Physics Wallah’s previous valuation of $1.1 billion, positioning it as one of the top players in India’s education technology sector.
Founded in 2020, Physics Wallah offers a mix of free and paid courses targeting competitive exams in India, with a focus on affordability. CEO Alakh Pandey emphasized that the company’s approach is designed to cater to the 99% of students who cannot afford high-priced coaching classes. “We are built for the remaining 99%, those who cannot go to these fancy coaching classes,” Pandey said. The company offers most of its content for free on YouTube, while also offering a paid service for students seeking additional features, such as homework and tests.
The company has seen rapid growth, reporting a 250% year-on-year revenue increase in the fiscal year ending March 2024. Pandey stated that he expects Physics Wallah to achieve the “highest absolute” EBITDA in the current fiscal year, underscoring the company’s profitability. EBITDA, a measure of operating performance, highlights a firm’s financial health without factoring in interest, taxes, depreciation, or amortization.
Looking ahead, Pandey said Physics Wallah is open to acquisitions that would provide access to new markets or users. He referenced the company’s 2023 purchase of a 50% stake in Kerala-based Xylem Learning as an example of its strategy for growth through acquisition. Pandey stressed that any future acquisitions must be focused on expanding content and community first.
The Indian ed-tech market, which saw a boom during the Covid-19 pandemic, has faced challenges, including the near-collapse of Byju’s, which was once valued at $22 billion. Despite these setbacks, Physics Wallah continues to focus on hybrid learning models and expanding internet access to students in smaller cities and rural areas. Co-founder Prateek Maheshwari noted that while some companies have struggled, demand for educational services remains robust. “I don’t believe the market has shrunk. A couple of players have struggled to perform post-Covid … but the learners are increasing year-on-year,” Maheshwari said.
Pandey and Maheshwari attributed Physics Wallah’s success to its commitment to education and outcomes for students, in contrast to other ed-tech companies that focused on aggressive marketing and acquisitions. “Education is a different thing. It’s not like any other startup where you can grow and talk about crazy valuation,” Pandey said, criticizing the focus on fundraising seen in other companies.
As for the future, Pandey indicated that an initial public offering (IPO) is on the horizon but stressed that it is not an immediate priority. The company is focusing on strengthening its governance by forming a board of independent directors, with the long-term goal of operating like a public company.
Featured Image courtesy of Inc42
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