SUMMARY
- Lightspeed Venture Partners is set to lead a $150-million investment round for Alakh Pandey’s edtech PhysicsWallah.
- “PhysicsWallah initiated discussions on a fundraising campaign last year, aiming for a $250 million round with an estimated valuation over $3 billion,” stated the sources.
- Should the deal be successful, PhysicsWallah’s valuation is set to more than double from around $1.1 billion in 2022 to over $2.7 billion to $2.8 billion (post-money).
Lightspeed Venture Partners is set to lead a $150-million investment round for Alakh Pandey’s PhysicsWallah—a notable deal in India’s educational technology (edtech) sector, amidst a downturn in investor interest due to a decrease in demand for online education.
Lightspeed, which has backed edtech firms like Bhanzu, Teachmint, and Byju’s, has issued a preliminary agreement providing PhysicsWallah with a pre-money valuation of $2.6 billion.
Sources have stated that the investors are currently conducting financial due diligence for the investment, which is expected to be a significant initial investment, also noting that the founders might consider secondary sales.
“PhysicsWallah initiated discussions on a fundraising campaign last year, aiming for a $250 million round with an estimated valuation over $3 billion,” added the sources. The primary goal was to reassign a new valuation to reflect their substantial growth. However, the actual negotiation process began only a few months ago. Lightspeed has provided a term sheet, but the transaction has not been finalized yet.
If the deal gets finalised, PhysicsWallah’s valuation is set to more than double from around $1.1 billion in 2022 to over $2.7 billion to $2.8 billion (post-money). In the post-pandemic times, the edtech sector has encountered obstacles as students have returned to traditional classroom settings following the easing of pandemic-related restrictions.
PhysicsWallah, one of India’s leading edtech platforms, secured its initial external investment of $100 million from private equity firm WestBridge Capital and US-based edtech investor GSV Ventures in mid-2022. The company stands among the few profitable edtech startups worldwide and achieved unicorn status in just two years from its launch.
Since then, PhysicsWallah, which initially focused on test preparation, has broadened its services to include upskilling, K-12 education (kindergarten to class 12), and offline learning centers. The company’s revenue has also seen a significant increase, rising from Rs 25 crore in FY21 to Rs 780 crore in FY23.
Another source noted that the company’s revenue more than doubled to approximately Rs 1,800 crore in FY24. For FY25, the company is aiming for a revenue of over Rs 2,900 crore. However, since the company began its expansion efforts following its external funding, its profitability has suffered. The company’s profit fell to Rs 6 crore in FY23 from Rs 100 crore in FY22. In FY24, the company reported a loss, as reported by CapTable.
PhysicsWallah has reduced its operations in Kota and relocated a portion of its educators to different areas to address the decline and boost its earnings. Established in 2020 by YouTube instructor Alakh Pandey and entrepreneur Prateek Maheshwari for a second venture, the company contends with the likes of Unacademy-backed by SoftBank, Vedantu-backed by Tiger Global, and Byju’s, which was once the most valuable startup in India, valued at more than $22 billion.
