UpGrad Raises USD 210 Million Fresh Funding

Just a week after its third acquisition in a month, leading online education platform upGrad has raised USD 210 million in a fresh funding round becoming an outlier in an otherwise slow edtech market in India.

The funding round was led by US testing and assessment provider ETS Global and Bodhi Tree, an investment vehicle set up by media veterans Uday Shankar and James Murdoch.

Singapore’s Kaizen Management Advisors; the family offices of Bharti Airtel, Narotam Sekhsaria (Ambuja Cements) and Artian Investments (Lakshmi Mittal); along with existing investors Temasek, IFC and IIFL also participated in the round.

upGrad’s multi-million fundraise comes at a time edtech startups in India, which were once the darlings of investors in India and overseas raising hordes of money in pandemic-hit 2020-21, are losing their glimmer. According to data from DealStreetAsia’s DATA VANTAGE, edtech startups in India raised USD 290.4 million in Q2, which is 80 per cent lower than the USD 1.4 billion amassed in the preceding quarter. Faced with a funding crunch and difficulty sustaining, some have had to lay off employees and even shut down operations.

The company, however, said it is on track to record annual gross revenues of USD 400-500 million during FY23, of which about 45 per cent will be realised from its own-branded online courses and programmes. In FY2021, it had revenues of USD 40.8 million and reported losses of USD 28.5 million.

In its fifth acquisition this year, upGrad said it had acquired test-preparation startup Exampur last week. Earlier in July, it acquired B2B edtech startup Harappa Education for USD 38 million and recruitment and staffing company WOLVES India for an undisclosed sum. With the latest funding, upGrad aims to strengthen its team to 7,600 employees from the present 4,800 in the next three months.

upGrad, which focuses on upskilling, was launched in 2015 and crossed 1 million learners by 2020. In 2021, the company became a unicorn and touched 2 million registered learners.

“There is a massive re-skilling revolution taking place around the world, and over the last five years, our 4,800 colleagues have worked hard and smart to be at the epicentre of taking advantage of this, not just in India but around the world,” upGrad co-founders Ronnie Screwvala and Mayank Kumar said in a joint statement.

upGrad’s founders — Screwvala, Kumar and Phalgun Kompalli — also invested $12.5 million in this round to maintain their ownership of over 50% in upGrad, the company said.

Lay Off

Earlier, edtech major Vedantu handed over pink slips to more than 100 employees in the latest round after firing more than 600 employees in May in a bid to sustain itself in a tough external environment and fear of recession.

During the pandemic, edtech companies successfully and quickly on-boarded new customers. This growing subscription base led to a steady stream of capital from investors, and start-ups started hiring in droves to keep pace with their aggressive expansion plans. These have now hit a roadblock with the reopening of physical schools and coaching centres.

According to a PricewaterhouseCoopers report, investment in this space declined by 50 per cent in the April to June 2022 quarter. It attributed this decline to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability.