Unacademy’s Valuation Plummets Below $500 Million Amid Active M&A Talks

“Three years ago, I used to care a lot about valuation, which probably led us to make some bad decisions,” Munjal said. “Today, I care more about building great products, having great unit economics, and growing profitably.” This strategic pivot has been accompanied by significant cost-cutting measures, including reducing the company’s annual cash burn from roughly Rs 1,400 crore in 2022 to under Rs 175 crore in 2025, alongside workforce downsizing.

M&A Talks Signal Industry Consolidation

Unacademy is actively engaged in M&A conversations, seeking a “win-win situation” that could strengthen its market position through consolidation. Earlier in 2025, the company was in acquisition talks with Kota-based Allen Career Institute, which valued Unacademy at around $800 million—a figure that ultimately led to a breakdown in negotiations due to valuation disagreements.

More recently, discussions with Upgrad reportedly valued Unacademy between $300 million and $320 million, indicating continued downward pressure on valuation and underscoring the challenges in securing a deal that reflects the company’s ambitions and investor expectations.

Strategic Refocus and Market Position

Unacademy has been sharpening its focus on its language learning app, Airlearn, and the test-prep segment, where it competes with Byju’s-owned Aakash Institute and WestBridge Capital-backed PhysicsWallah. The appointment of cofounder Sumit Jain as CEO of the test-prep business in September 2025 signals a leadership realignment aimed at driving profitability and operational efficiency.

Despite the valuation setback, Munjal emphasized that Unacademy maintains a healthy balance sheet with decades of runway and revenues nearing Rs 600 crore, projecting a clear path to profitability in the near term. This reflects a broader trend in private equity and venture capital circles, where investors increasingly prioritize sustainable unit economics and clear exit strategies over inflated growth metrics.

Implications for Edtech and Private Equity

Unacademy’s valuation trajectory and M&A activity exemplify the evolving landscape of the Indian edtech sector, which is undergoing consolidation after a pandemic-driven boom. For private equity investors and deal advisors, this signals a shift toward more disciplined investment approaches, emphasizing profitability and strategic fit in cross-border M&A and domestic consolidation deals.

Industry experts note that such valuation corrections are becoming common as startups recalibrate expectations and focus on long-term value creation rather than short-term market hype. This environment creates opportunities for savvy investors to acquire high-potential assets at more reasonable valuations, particularly in sectors like edtech where digital transformation remains a key growth driver.

Key Takeaways for Executives and Investors

• Valuation Reset: Unacademy’s fall from a $3.5 billion valuation to below $500 million highlights the risks of overvaluation and the importance of sustainable growth metrics.
• M&A as a Strategic Lever: Active merger talks indicate consolidation trends in edtech, offering pathways to scale and profitability through strategic partnerships.
• Focus on Profitability: Cost rationalization and leadership changes underscore a shift from growth-at-all-costs to disciplined financial management.
• Market Positioning: Concentration on niche segments like language learning and test preparation aligns with evolving consumer demand and competitive dynamics.
• Private Equity Exit Strategies: The scenario exemplifies the need for realistic exit planning and valuation discipline in high-growth sectors.

Visual Insight: Unacademy Valuation Trend (2021–2025)

(Chart illustrating valuation drop from $3.5B in 2021 to sub-$500M in 2025, alongside key funding rounds and M&A talks timeline.)

Unacademy’s journey offers a cautionary yet instructive case for startups, investors, and dealmakers navigating the complex dynamics of post-pandemic private equity and M&A markets in India’s booming edtech sector.