Indian education technology startup Physics Wallah has secured $210 million in fresh funding amid a tough fundraising environment for education technology companies in the country following the collapse of Byju's, once the industry giant.
PhysixWallar said on Friday that its Series B round was led by hedge fund Hornbill Capital, a joint venture between China's Orchid Asia and India's Hornbill, with “significant” participation from Lightspeed Ventures Partners, along with existing backers Westbridge and GSV. The round values PhysixWallar at $2.8 billion, a significant increase from the previous $1.1 billion it raised in June 2022.
The startup has raised over $310 million to date. The new funding, the largest for an Indian education technology company since 2022, also includes a secondary deal of about $35 million in which founders and employees sold part of their stakes.
Physics Wallah started as a YouTube channel in 2016, when co-founder and teacher Alakh Pandey posted his lectures for free to help students who, like him, couldn't afford premium coaching classes. By 2020, Physics Wallah had grown to become the largest Indian education community on YouTube, and Pandey had formalized the initiative into a company that now serves 46 million students in five native languages.
“He always felt that he would not be able to crack the IIT entrance exams as he did not get quality education,” said Prateek Maheshwari, co-founder of Physics Wallah, explaining the motivation behind the startup's mission.
As the world's most populous country, India boasts one of the world's largest education markets, with approximately 250 million students attending school each year and around 4 million taking entrance exams for engineering and medical schools.
Physics Wallah caters to a broad segment of this market, from third-year students to those looking to enter highly competitive engineering and medical entrance exams or government jobs. It also offers live classes, which typically attract tens of thousands of people at the same time.
The startup, which also operates about 180 brick-and-mortar stores, has employed teaching assistants and AI to field student queries and has developed an app called “AI Guru” to help students solve problems in their study materials. Physics Wallah trained its AI on its own data, Maheshwari said.
One of Physics Wallah's big strengths is the affordability of its courses, which start at $50 for a year, and the startup claims to have more than 5.5 million paying students.
“We cover almost all the exams in India and when it comes to special exams like JEE, NEET, GATE, UPSC, CAT etc, we are No. 1 in terms of revenue and number of students served,” Maheshwari said.
This traction is looking good for Physics Wallah: The company told TechCrunch it plans to report revenue of $96.2 million in the fiscal year ending March 2023 and sees revenue growing 2.5x between March of last year and March 2024. The company expects the fiscal year ending March 2025 to be its most profitable ever on an EBITDA basis.
Dev Khare, a partner at Lightspeed and one of the earliest investors in Indian edtech startups, told TechCrunch that a number of trends are driving Physics Wallah's growth: “When you bring the price down, things become a lot more affordable,” he said, pointing to budget hotel chain Oyo, quick commerce startup Zepto, and storytelling platform PocketFM as examples of Lightspeed portfolio startups that implement similar strategies.
Maheshwari said Physix Wala will explore inorganic growth opportunities with the new funding, but added that the company raised capital primarily because money was available and investors saw value in doing so. The company, which has acquired about 10 companies over the past three years, is considering an IPO but cautioned that it is unlikely to act soon.
The fresh funding comes as India's education technology industry faces major headwinds, with online learning startups that grew rapidly during the COVID-19 pandemic when schools were closed seeing a sharp decline in usage since then.
Unacademy, a leading Bengaluru-based education technology company, has cut around 2,000 jobs from 2022 onwards. The company cut another 250 jobs in July this year, citing the need for restructuring to improve profitability.
Once India's largest startup with a market capitalization of $22 billion, Bijoux has suffered a dramatic downturn over the past two years and is now facing possible bankruptcy proceedings.
Maheshwari said recent industry trends have not impacted market opportunities. “From a student perspective, things haven't changed much even post-Covid. The market is completely hybrid and students are enjoying the best of both worlds and stepping up their preparation,” he said.
Physics Walaah “is a rare breed of school that blends vision, execution and impact with the vibrant 3C model of content, community and commerce,” Hornbill Capital founder Manoj Thakur said in a statement. “We're excited to see PW leverage AI to not only improve student outcomes, but also their mental health.”
No investment banks were appointed for the transaction.