Indian Unicorns 2022: upGrad Consolidating within the EdTech Sector

India’s online education market is expected to grow to $3.5 billion in 2022 from $735 million in 2019. India boasts of the world’s second-largest e-learning market after the US that is catered by more than 9,000 education technology startups. upGrad is one of the Unicorn players consolidating this space.

upGrad’s Offerings

Founded in 2015 by Mayank Kumar, Phalgun Kompalli, Ravijot Chugh, and Ronnie Screwvala, Mumbai-based upGrad is an online platform that offers educational services to its clients. upGrad was set up when its founders noticed that when people entered the work environment, they stopped upskilling themselves, but all industries required professionals to continuously upskill themselves. They set up upGrad to impact working professionals by helping them upskill while they continue to work. They wanted to facilitate access to quality education through its programs.

Within a year, 114 learners had graduated out of upGrad after attending their first program on entrepreneurship – “Startup with upGrad”. By 2018, it had reached a user base of over 10,000 learners, and the following year it became India’s largest online higher education service provider. Today, upGrad delivers online learning as interactive as a classroom setup. Its range of programs consists of digital marketing, product management, entrepreneurship, data analytics, data-driven management, and digital technology management, in addition to offering industry insight and student support services. It has expanded its presence to international markets and boasts of over 2 million registered learners across 100 countries.

As part of its international expansion, upGrad has been partnering with education providers. Recently, upGrad announced a partnership with Fullstack Academy to create two new Caltech certificate programs in Cybersecurity and Data Analytics. The programs help professionals with accurate subject knowledge and attain enhanced, positive career outcomes and results.

Earlier this year, upGrad announced the acquisition of another Indian player, Mumbai-based Work Better, an enterprise training provider. The acquisition will help upGrad expand into the enterprise learning and development segment. Work Better had more than 300 clients and over 250 trainers and provided tailored education for employees and businesses. Terms of the acquisition were not disclosed. Last year, upGrad had also announced the acquisition of higher education platform TalentEdge. TalentEdge was set up in 2012 and provides more than 60 courses in association with 20 universities including renowned Indian institutes such as IIMs, MICA, XLRI, along with international institutes such as eCornell, and UCLA Extension among others. It has over 500,000 individual and corporate learners.

upGrad’s Financials

As of August last year, upGrad reported that it had over 62,000 paid students who were accessing courses that cost between $3,300 to $6,750 and ran for six months to two years. It has seen strong growth in revenues. Its revenues nearly doubled in FY21 to INR. 302.26 crores (~$40.7 million), compared to revenues of INR 162.57 crores (~$21.9 million) in FY20. Recent reports suggest that it is now trending at an annual revenue run rate of over $210 million, and is on track to attain $500 million in annual revenue run rate by fiscal 2022. But the company continues to record losses. It reported a net loss of INR 211 crores (~$28.4 million) for FY21, compared to a net loss of INR 78 crores (~$10.5 million) for FY20. Given that the company is growing at a rapid pace, its losses aren’t very concerning.

upGrad has raised $201 million in four rounds of funding led by IIFL Finance, International Finance Corporation, Temasek Holdings, Unilazer Ventures, and IIFL Asset Management. Its most recent round was held in August 2021 where it raised $65 million at a valuation of $1.2 billion. A funding round held earlier last year had valued the company at $600 million. upGrad plans to use the latest acquired funds to continue to acquire. The valuation of $1.2 billion against a revenue run rate of $210 million is relatively reasonable compared to some of the other Indian Unicorns that we have covered recently.

India’s EdTech space is crowded. There are big players like Byju, Softbank-backed Unacademy, Amazon Academy, and many more. There is enough room in the industry for consolidation. According to a recent report, the EdTech sector globally is expected to grow 15% annually to $30 billion by 2030. Indian players, like upGrad, are targeting to become leading exporters of these services.

Photo Credit: Gerd Altmann from Pixabay

This segment is a part in the series : Indian Unicorns 2022