In a recent development, Exampur, a test preparation startup, has encountered financial challenges, leading to significant consequences for its employees. Its disclosure, which comes nearly a year after upGrad’s attempted acquisition collapsed, highlights the challenges the edtech company is facing. This article explores the specifics of Exampur’s financial situation, the causes of the difficulties, and the possible effects on its employees.
Credits: Hindustan Times
The upGrad Acquisition and Fallout
Founded in 2018 by Vardaan Gandhi and Vivek Kumar, Exampur gained recognition for offering over 200 test preparation courses for government jobs, with a user base exceeding 10 million students. In August, upGrad, an edtech unicorn, acquired Exampur for an undisclosed amount. However, subsequent media reports revealed that the acquisition was unsuccessful due to conflicts in business alignment and the valuation of Exampur.
As a consequence of the failed acquisition, Exampur underwent a significant restructuring. The company, which initially operated 24 YouTube channels, scaled down to nine. This reduction aimed to focus on channels generating revenue, as Exampur grappled with depleting funds.
Financial Struggles and Workforce Reduction
The financial challenges faced by Exampur manifested in delayed salary payments for its employees, with some backlogs extending as far back as July. Founder Vardaan Gandhi attributed the payroll delays to the failed acquisition and the subsequent necessity to scale down operations. He revealed that the company sold personal holdings and mortgaged assets to continue its operations during this difficult period.
The downsizing wasn’t limited to channels; the workforce also experienced a significant reduction. From approximately 650 employees in January, the number dwindled to close to 200 as of the latest update. The scaling down involved a combination of layoffs and employees voluntarily leaving due to delayed salaries.
EPFO Data and Provident Fund Payments
According to data on the EPFO website, Exampur only paid provident funds to 30 employees in November, a sharp decline from 61 in July. Gandhi clarified that some of the 200 employees were contractual and not on the company’s payroll, without providing specific details on the distribution.
Despite the challenges, Gandhi expressed optimism, stating that the company is now cash-positive. In FY23, Exampur reported a profit of about Rs 15 lakh on a topline of Rs 23.62 crore. The founder assured that the company plans to settle all dues, including December salaries, and is committed to offering employees the choice to convert accrued amounts into equity or receive cash by the end of February.
Impact on Former Employees and Future Plans
The impact of Exampur’s financial struggles extends to former employees awaiting full and final settlements. The company plans to pay off the entire amount in tranches over the next three to four months, with the first payment scheduled for January 31. To mitigate the impact of the delay, Exampur has committed to paying interest on the due amounts, treating them akin to fixed deposits.
Looking ahead, Exampur is making efforts to raise a new funding round, a process expected to take four to five months to conclude. The company had previously secured funding from a consortium of Singapore-based angel investors in November 2021, including executives from prominent companies like Coca-Cola, Vivendi, Citibank, Qualcomm, and Interpublic Group.
Potential Impact on the Edtech Sector
Exampur’s financial difficulties and the larger difficulties the edtech industry faces illustrate the uncertainties that exist in the market. The amount of money given to Indian edtech companies fell sharply, from $5.33 billion in 2021 to $712 million in 2023. A fundraising winter hit the industry, forcing many businesses to stretch their financial runways by drastically cutting costs and hiring fewer people.
Exampur’s problems have repercussions that highlight how vulnerable even well-established edtech businesses are to shifting investor attitude and market circumstances. The combination of the funding slump and investor mistrust of edtech has compelled businesses to reassess their business plans and viability.
Conclusion
Exampur’s journey, marked by an unsuccessful acquisition, financial struggles, and workforce reductions, reflects the challenges prevailing in the edtech sector. The commitment to settle dues and explore avenues for new funding showcases the resilience of the company in navigating a tumultuous period. As Exampur aims to recover and regain stability, its experience serves as a cautionary tale for other edtech players, emphasizing the need for strategic financial planning and adaptability in a dynamic market landscape.
