Edtech unicorn PhysicsWallah (PW) has closed its Series B funding round by raising $210 million through a combination of primary and secondary transactions.
Led by Hornbill Capital, this round included participation from Lightspeed Venture Partners, alongside existing investors GSV Ventures and WestBridge Capital. With this investment, the company’s post-money valuation reached $2.8 billion, a 2.5x increase from its previous valuation of $1.1 billion.
Founded in 2016 by former teacher-turned-entrepreneur Alakh Pandey, the edtech firm had previously raised $102 million from its first financing round from WestBridge and GSV Ventures.
The latest round marks one of the largest primary capital raisings in the edtech segment in recent times, signaling renewed investor confidence after a long hiatus, especially as companies revert to traditional teaching methods while incorporating digital innovations.
The current recovery in funding has emerged after very low investment levels in 2023, which fell to just $321 million from a peak of $4.1 billion in 2021.
Tracxn reports that funding in the Indian edtech sector has grown annually at a rate of $215 million, reflecting a slight increase from the $321 million secured by edtech start-ups this year.
After the pandemic, funding in India’s edtech ecosystem dropped as the reopening of educational institutions reduced the demand for online learning. Additionally, corporate governance issues and the financial troubles of distressed edtech company Byju’s dented investor confidence in the sector.
Despite the modest recovery, the sector still has a long way to go, as funding in 2023 remains 87% lower than the $2.4 billion raised in 2022. Edtech funding peaked at $4.1 billion in 2021.
Focus on Scale
In FY23, PhysicsWallah recorded a threefold increase in operating revenue, reaching INR 772 crore on a standalone basis. This surge was mainly driven by the company’s expansion into offline education, which now contributes about 45% of its total revenue.
In an interview with MoneyControl, co-founder Prateek Maheshwari shared that the edtech firm has over INR 1,200 crore in the bank to drive its expansion further, and they intend to use the new capital wisely to scale.
Despite a decline in profits in FY23 due to increased spending on growth, Maheshwari and Pandey remain optimistic about the future. Pandey confidently stated, “FY25 will be our highest EBITDA year.” He noted that revenue in FY24 had already increased by 2.5x, and their strategic decision to invest in offline centers, initially met with skepticism, is now paying off.
PW’s net profit dropped from INR 98 crore in FY22 to INR 16 crore, driven by rising employee costs and provisions for non-cash expenses, which led to a notable increase in overall expenses.
“The mandate for FY24 was to capture market share, which resulted in a profit drop. However, we are confident in the long-term roadmap. For FY25, we are targeting more than 50% growth,” Maheshwari added.
Strategic Expansion
With the fresh capital, PhysicsWallah plans to significantly strengthen its operations. The company aims to expand student reach across India by establishing local education centers—micro hubs—and continue its strategy of merging with community-driven education platforms to bolster its market position.
Maheshwari stated, “Our strategy is to avoid large centers like Kota, where the student population is high and the associated challenges are significant. Instead, we are focusing on small, efficient centers closer to students’ homes. This year, we are expanding massively in South India, while continuing to scale Vidyapeeth with micro hubs.”
The edtech firm has previously acquired smaller firms like Xylem Learning, PrepOnline, and Altis Vortex. Pandey said, “We are exploring opportunities in different geographies, especially in the South. We are also looking for small, growing platforms, particularly those led by teachers who share our vision of community-building and have the same brand affinity as PhysicsWallah. We are not interested in large-scale acquisitions but in smaller entities.
