Talks between Indian education technology companies upGrad and Unacademy have ended without an agreement after months of discussions, following differences over valuation and deal structure, according to people familiar with the matter. The collapse of negotiations comes during a prolonged slowdown in private funding across India’s startup sector, where companies that once commanded high valuations during the pandemic-era capital surge are now facing tighter scrutiny from investors and potential buyers.
The Indian edtech industry has been under sustained pressure since in-person learning resumed after the Covid-19 pandemic. Rapid user growth seen during lockdown periods has moderated, customer acquisition costs have risen, and several companies have shifted focus from expansion to cost control. This backdrop has shaped merger and acquisition activity in the sector, with consolidation discussions often driven by the need to preserve cash, streamline operations, or find strategic alignment amid reduced funding availability.
Against this environment, upGrad, founded by Ronnie Screwvala, entered discussions to acquire rival Unacademy, according to earlier reports by Moneycontrol. The talks were viewed as one of the most prominent potential consolidation moves in the Indian edtech space, given Unacademy’s scale, brand recognition, and past valuation. Unacademy, founded by Gaurav Munjal, Roman Saini, and Sumit Jain, was once among India’s most valuable startups, having raised capital from investors including SoftBank, Temasek, and Tiger Global.
Sources familiar with the negotiations said the proposed transaction was structured as an all-stock deal. Under the terms discussed, Unacademy was expected to be valued in the range of $300 million to $400 million, a sharp decline from its peak private valuation of around $3.4 billion in 2021. In exchange, Unacademy’s existing investors were expected to receive a minority stake in upGrad, which has been valuing itself at around $2 billion, according to people briefed on the matter.
Despite extended discussions, the two sides were unable to reach agreement on valuation expectations and the structure of the transaction. Ronnie Screwvala confirmed to Moneycontrol that the deal would not proceed, stating that differences over valuation prevented the parties from arriving at mutually acceptable terms. He later reiterated this position in comments to other media outlets, declining to disclose specific financial figures.
The end of talks has had immediate implications for Unacademy’s leadership and strategic planning. According to reports, co-founder Gaurav Munjal has decided to continue overseeing the company’s operations following the collapse of the proposed acquisition. Munjal had earlier stepped back from daily management responsibilities as part of a restructuring effort, with Sumit Jain taking charge of the core test preparation business. The breakdown of the deal has led to a reassessment of these leadership plans.
People familiar with the situation said Munjal and Roman Saini had been exploring the possibility of spinning off certain products into independent ventures. One such plan involved AirLearn, a language learning application that was being considered as a separate business led by the founders. In parallel, Munjal had been in talks to raise approximately $17 million from a group of investors, including Peak XV Partners and Blume Ventures, along with several startup founders, to fund a new venture. These discussions have now been put on hold following the failure of the upGrad talks.
Unacademy’s financial position remains a key factor in its strategic decisions. Company filings show that Sorting Hat Technologies, Unacademy’s parent entity, reported a standalone loss of ₹284.3 crore for the financial year ended March 2024, a substantial reduction from a loss of ₹1,591.2 crore in the previous year. Total income for the year stood at ₹864.3 crore, slightly lower than ₹868.8 crore reported in the prior year. The company’s net worth has declined for two consecutive years, falling to ₹1,078.7 crore in fiscal 2024 from ₹1,189.17 crore in fiscal 2023.
Sources said Unacademy holds cash reserves of roughly ₹1,100 crore, providing some flexibility as the board evaluates future options. These options include continuing as a standalone business, pursuing fresh fundraising, or exploring other merger or acquisition opportunities. The company has already undergone several rounds of restructuring, including layoffs and business line closures, as it works to reduce expenses and focus on core offerings.
The valuation gap that derailed the deal reflects broader shifts across India’s startup ecosystem. During 2020 and 2021, edtech companies attracted large inflows of capital as students turned to online platforms. Valuations rose rapidly, often based on growth expectations that assumed prolonged remote learning. As those conditions changed, many companies have faced pressure to reset expectations, leading to down rounds, write-downs, or failed deal discussions.
In a post on social media in December marking Unacademy’s tenth anniversary, Munjal acknowledged that the company’s valuation had fallen to below $500 million. He attributed the decline to strategic decisions made during the pandemic period, as well as changes in market conditions, including a return to offline learning and increased competition from lower-priced offerings. The post provided rare public confirmation of the scale of valuation correction faced by the company.
upGrad, for its part, has continued to pursue selective acquisitions and expansion in areas such as overseas education and professional upskilling. The company has completed multiple acquisitions over the past few years and has focused on building revenue streams tied to higher education and corporate learning. However, people familiar with the Unacademy talks said upGrad identified several challenges related to Unacademy’s business model, including pressure on its core test preparation segment and rising competition from offline coaching centres.
According to a PTI report citing sources, upGrad walked away from the transaction after assessing the level of investment that would be required to stabilise and grow Unacademy’s operations. These concerns, combined with the valuation expectations, contributed to the decision to end negotiations. upGrad did not publicly comment on specific business assessments but confirmed that agreement on valuation could not be reached.
The collapse of the talks has also renewed attention on employee stock ownership at Unacademy. Sharp drops in private valuations often affect the value of employee stock options, especially where liquidation preferences favour preferred shareholders. Unacademy’s leadership had previously allowed some former employees to exercise vested options so they could participate in any future equity outcome. It remains unclear whether further steps will be taken following the end of acquisition discussions.
The broader edtech sector has seen increased leadership churn as funding conditions tightened. Several founders and senior executives across companies have stepped back from operational roles to explore new ventures. In recent months, upGrad co-founder Mayank Kumar left the company to start a healthcare staffing business, while former Adda247 co-founder Chandan Singh began working on a new startup. These moves reflect a wider trend of recalibration within the sector.
At Unacademy, the appointment of Sumit Jain to lead the test preparation business was part of a shift toward tighter operational control. Insiders said the focus has been on reducing cash burn and stabilising revenue from core offerings. The end of the upGrad talks removes one possible exit or consolidation path but leaves the company with sufficient cash to continue operations in the near term.
There has been no public market reaction, as both upGrad and Unacademy are privately held. However, the development has been closely watched by investors and founders as an indicator of how far valuations in the edtech sector have reset since their peak. Industry executives say the failed deal underscores the difficulty of bridging valuation expectations between buyers and sellers in the current funding climate.
