Edtech startup Physics Wallah's valuation crosses $2.8 bn with new funding

$210 mn Series B funding round led by Hornbill Capital; Physics Wallah will use funding to expand reach

The largest edtech fundraise in the last two years has pushed the valuation of Physics Wallah (PW) to $2.8 billion, a more than two-fold increase from  $1.1 billion earlier. The Noida-headquartered education company announced a $210-million fundraise on Friday at the close of a Series-B round, that changed the pecking order in the Indian edtech space.

PW, which has said the current financial year will mark the ‘’largest absolute profitability’’ for the group, has now replaced Upgrad as the third largest edtech firm in terms of valuation. Unacademy and Eruditus occupy the top two slots as Byju’s went into insolvency. In 2022, Byju’s was valued at $22 billion.      

 

PW co-founder Prateek Maheshwari said the funding will enable the company to improve reach and technology.

“This comes on the back of strong, sustainable year-on-year (Y-o-Y) growth. In fact, FY25 is going to be the year of the largest absolute profitability for the PW group. There are no good or bad markets, only good or bad stories, and ours is a great impact story,” Maheshwari added.

Though the funding would help PW to pursue inorganic expansion, it is more cautious than ever for keeping track of capital allocation.

Abhishek Mishra, chief strategy officer of PW, said the funding would help the firm to enhance its content and publication offerings, and explore mergers with community-driven education platforms.

The funding round at PW was led by Hornbill Capital, with participation from Lightspeed Venture Partners and existing investors GSV and WestBridge. PW said the funding round showed investors’ confidence in edtech and the company.

"This investment is not just a validation of our efforts to democratise education and make quality education accessible to every student in India, but also a testament to the impact we have created over the years,” said Alakh Pandey, founder and CEO of PW.

PW produces 9,500 hours of educational content every week with a student base across 18,808 pin codes, accounting for almost 98 per cent of pin codes in India. This funding will bolster its already significant cash reserves to support future growth plans. PW’s expansion from school education to skilling is integral to its strategic vision, designed to support students at every stage of their journey, the company said.

While the company is yet to disclose its FY24 numbers, PW’s revenue grew more than threefold to Rs 779 crore in FY23. However, the firm’s profit declined more than 90 per cent to Rs 8.87 crore in FY23, according to Entrackr.

As per data compiled by The Kredible, edtech startups raised only $138 million across 21 deals during the first half of 2024, a sharp fall from $456 million in 2023, $2.3 billion in 2022, and $5.8 billion in 2021.

As PW raises funding, it is taking several lessons from the crisis at its peer Byju’s. Byju's has seen its fortunes dwindle due to many regulatory issues and disputes with investors, triggering the firm’s insolvency.

“One lesson is that acquisitions are easy to transact, but difficult to integrate. This is a good lesson not just for the edtech industry, but for all the industries,” said Maheshwari.

“The second fundamental thing is running a good edtech company should include focus on teachers and students, NPS (net promoter score), and course completion rates. The focus also has to be on results and outcomes, which is very important,” Maheshwari said, adding that he is of the view that bad acquisition decisions also played a role in the crisis at Byju’s.

Mishra said the other learning from the crisis at Byju’s is that one should focus on a very strong corporate governance structure.

“Be transparent to other stakeholders. Be the first one to deploy the best corporate governance measures and independent authorities, so that the company is run democratically and it is a process-led institution,” Mishra added.

Dubai-based Manoj Thakur, founder of Hornbill Capital, said PW combines vision, execution and has a thriving "3C model" — Content, Community, and Commerce. “We are excited to see PW’s use of AI (artificial intelligence) not only to help improve students’ outcomes but also their emotional wellbeing,” Thakur said.

Dev Khare, partner at Lightspeed Venture Partners, said the community of students built over years of painstaking creation of quality educational videos, as well as reasonably priced offerings for online and offline courses, has made PW a familiar brand name across India.

Sandeep Singhal, co-founder and managing partner at WestBridge, said the decision to invest in PW is driven by the company’s growth, strong execution, and long-term vision. “We believe in the leadership of Alakh (Pandey) and Prateek (Maheshwari), and their ability to solve one of India’s biggest challenges, which is to provide world-class education to all at lower cost,” Singhal stated.

Deborah Quazzo, managing partner at GSV Ventures, said the impact that PW has had on “students across Bharat” is incredibly inspiring. “Our investment in PW reflects our strong belief in the company’s commitment to quality and accessibility,” Quazzo remarked.