Indian edtech startup Physics Wallah has raised $210 million in fresh funding as the country’s edtech companies face a tough funding environment following the collapse of Byju’s, once the sector’s largest.
Physics Wallah said on Friday that the Series B round was led by hedge fund Hornbill Capital, a joint venture between China’s Orchid Asia and India’s Hornbill, with “substantial” participation from Lightspeed Ventures Partners, along with existing backers WestBridge and GSV. The round values Physics Wallah at $2.8 billion, up from its previous $1.1 billion valuation in June 2022.
The startup has raised over $310 million so far, the largest new funding raised by an Indian edtech since 2022, and included a secondary deal worth about $35 million in which the founders and employees sold some of their shares.
Physics Wallah started its journey in 2016 as a YouTube channel, with co-founder and teacher Alakh Pandey posting lectures for free to help students who couldn’t afford to enroll in premium coaching classes. By 2020, Physics Wallah had grown to become the largest Indian education community on YouTube, and Pandey formalized his efforts into a company that now serves 46 million students in five native languages.
“He always felt that he would never be able to crack the IIT entrance exam because he did not have access to quality education,” says Prateek Maheshwari, co-founder of Physics Wallah, explaining the motivation behind the startup’s mission.
India, the world’s most populous country, boasts one of the world’s largest education markets, with about 250 million students enrolled in school each year, and about 4 million taking entrance exams for engineering and medical schools.
Physics Wallah caters to a wide spectrum of this market, serving students from third year through to competitive engineering and medical entrance exams and preparing for government jobs. It also offers live classes that typically attract tens of thousands of concurrent attendees.
The startup, which operates about 180 offline centers, has developed an app called AI Guru that employs assistants and AI to answer students’ questions and help them solve problems in learning materials. Maheshwari said Physics Wallah trained the AI with its own data.
One of Physics Wallah’s main strengths is its affordable tuition, which starts at $50 for a year. The startup says it has over 5.5 million students on a paid subscription.
Maheshwari said, “We cover almost all the exams in India and are number one in terms of size of student base in terms of revenue and services provided across all speciality exams like JEE, NEET, GATE, UPSC, CAT, etc.”
That momentum is helping Physics Wallah. As of the end of March 2023, it had $96.2 million in revenue, and the startup told TechCrunch that it grew revenue 2.5x between March 2020 and March 2024. It expects its fiscal year ending March 2025 to be its most profitable ever in terms of EBITDA.
Dev Khare, a Lightspeed partner and one of the early investors in Indian edtech startups, told TechCrunch that a number of trends have converged to help Physics Wallah grow. “When you lower the price point, everything becomes much more accessible,” he said, pointing to budget hotel chain Oyo, quick-commerce startup Zepto, and storytelling platform PocketFM as other examples of startups in Lightspeed’s portfolio that operate a similar playbook.
Maheshwari said Physics Wallah would look for inorganic growth opportunities with the fresh funds, but added that the company raised the money because it had enough money and investors thought it was worth it. The company, which has acquired about 10 companies in the past three years, is considering an IPO but cautioned that it will not make any moves anytime soon.
The new funding comes as India’s edtech sector faces significant headwinds. Online learning startups that saw rapid growth during the COVID-19 pandemic, when schools were closed, have since seen a sharp decline in usage.
Bangalore-headquartered edtech giant Unacademy has cut about 2,000 jobs since 2022. The company cut another 250 jobs in July this year, citing the need for restructuring to become profitable.
Byju’s, previously India’s most valuable startup at $22 billion, has suffered a dramatic downturn over the past two years. The company is now facing the possibility of bankruptcy proceedings.
Maheshwari said recent industry events have not impacted market opportunities. “From a student’s perspective, things haven’t changed much post-COVID. The market is completely hybrid and students are getting the best of both worlds to enhance their preparation,” he said.
Manoj Thakur, founder of Hornbill Capital, said in a statement that Physics Wallah is “a rare combination of vision, execution and impact, with a thriving 3C model (content, community and commerce).” “We are excited to see PW use AI to improve students’ academic performance as well as their emotional wellbeing.”
No investment bank was appointed for this transaction.
