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Edtech unicorn PhysicsWallah (PW) has bagged $210 million in a Series B funding round led by investment firm Hornbill Capital, with a sizable participation from venture capital firm Lightspeed Venture Partners.

This is a significant milestone given the scarcity of substantial deals in India’s edtech sector lately. The industry is facing a challenging time, marked by waning investor interest and reduced demand for online learning in the aftermath of the pandemic.

The Alakh Pandey-led company, which has managed to sustain its online learning momentum while expanding its offline presence, also received backing from its existing investors, WestBridge Capital and GSV Ventures. 

Both investors have doubled down after participating in PW’s inaugural $100-million funding round in 2022, which catapulted the edtech firm into the unicorn club.

Sandeep Singhal, Co-founder and Managing Partner at WestBridge, explained in a statement that the investment firm’s decision to double down on PW was driven by the edtech company’s “exceptional growth, strong execution, and long-term vision”.

“The positive outcomes achieved by PW students align perfectly with our investment philosophy, and we are excited to further strengthen our partnership,” remarked Deborah Quazzo, Managing Partner at GSV Ventures.

With the latest funding round, PW’s post-money valuation has soared to $2.8 billion, making it the third-most valued edtech firm, trailing only Unacademy ($3.4 billion) and Eruditus ($3.2 billion), based on their last valuations.

“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,” Founder and CEO Alakh Pandey, said.

Rapid expansion

PW, which initially focused on the test-prep segment, has rapidly diversified its educational offerings over the past two years to encompass everything—from school education to skills training—casting its learning net over a wide base of learners. 

Meanwhile, the edtech company has bolstered its offerings by acquiring firms like PrepOnline and Altis Vortex to enhance its NEET, GATE, and related categories. Additionally, it has expanded its footprint with deals like acquiring UAE-based startup Knowledge Planet, marking PW’s first foray into international markets.

Building on this momentum, PW will use the funds for market consolidation, with the potential for “one large deal” in the next 12 months, Co-founder Prateek Maheshwari told YourStory. This deal could involve geographical expansion or the acquisition of a valuable content-rich edtech asset in the domestic market.

The Noida-based company has not made any shortlists, and there are no active talks ongoing, Maheshwari elaborated, adding that smaller deals—which are “always welcome”—could also be considered in addition to a significant deal.

He highlighted that the company has developed the ability to acquire and integrate other companies. He cited the example of Xylem Learning wherein it acquired a 50% stake in a Rs 500-crore deal in 2023, and noted that the Kerala-based company’s revenue has since grown fourfold.

The edtech sector, which witnessed both mega and mini deals during the pandemic, has seen comparatively smaller deals over the past year, including ALLEN’s acquisition of Doubtnut and Adda247’s acquisition of Ekagrata Eduserv.

“Having a larger treasury gives us more comfort and the ability to act when an asset opportunity arises. This allows us to structure a good deal,” noted Maheshwari.

The edtech company will also use the funds raised to scale operations, enter the K-12 education segment, enhance content and publication offerings, and explore mergers with community-driven education platforms.

“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 PhysicsWallah a familiar brand name across the breadth and width of India and across all socioeconomic groups,” noted Dev Khare, Partner at Lightspeed Venture Partners.

PW is one of the most affordable edtech platforms in India. According to the company, its fees for online courses are about one-tenth that of the competition’s, and about half for offline courses.

Sustainable growth

Maheshwari pointed out that PW was fundamentally an online company, so managing offline operations—including SOPs, student ratings, course completion rates, and 3,800 teachers—was an enormous challenge.

The edtech company ventured into the offline space in 2022 with PW Vidyapeeths, i.e. offline learning centres. Over the past two years, two lakh students have enrolled in the Vidyapeeths, Maheshwari said, adding that these offline units became profitable this year.

While the Vidyapeeths have turned profitable, the edtech company’s profitability hat-trick—FY21, FY22, and FY23—was bowled out in the fourth innings by rising expenses, with PW slipping into a marginal loss at the group level. On a standalone basis, however, PW broke even in FY24, according to Maheshwari.

PW clocked a topline of over Rs 2,000 crore on a consolidated basis and over Rs 1,600 crore on a standalone basis in FY24, with a 55:45 split between online and offline revenue, Maheshwari shared. The company is expected to file its FY24 financials with the MCA before September 30.

For context, BYJU’S surpassed the Rs 2,000 crore revenue mark in FY20 and Eruditus in FY23, while PW achieved this milestone in its fourth year of operations. BYJU’S was incorporated in 2011, Eruditus in 2010, and PW in 2020.

I-GAAP (Indian Generally Accepted Accounting Principles) refers to the traditional accounting standards used in the country, while Ind-AS (Indian Accounting Standards) is a set of accounting standards aligned with IFRS (International Financial Reporting Standards) for greater transparency and consistency.

PW’s rapid expansion comes amid a turbulent period for BYJU’S, once the leading edtech platform and the poster child of the Indian startup ecosystem. BYJU’S has faced financial challenges and is undergoing insolvency proceedings, raising questions about the sustainability of its rapid growth and acquisition strategies, as exemplified by its journey.

PW has experienced impressive growth, however, sustainable growth and profitability are essential, and it must navigate its own challenges as it expands.

Maheshwari stated that FY24 was the year of “growth,” while FY25 is the year of “sustainable growth,” as PW aims to return to a profitable path. 

“We have bounced back this year, with the first two quarters being EBITDA profitable for the first time in our company’s history,” he added. EBITDA, or earnings before interest, taxes, depreciation and amortisation, is a measure of core operational efficiency.

While the profitability metric for FY25 cannot be determined due to the transition from I-GAAP to Ind-AS, this fiscal year is expected to be the highest in absolute EBITDA profitability since inception, according to Maheshwari.

The PW Co-founder emphasised that BYJU’S targets the top 5% of India while PW focuses on the broader market, prioritising affordability to cater to Bharat, which generally includes tier II cities and beyond.

“The impact that PhysicsWallah has had on students across Bharat is incredibly inspiring…The PW team has a unique ability to democratise education on a global scale, delivering high-quality learning at an affordable cost,” noted Quazzo of GSV Ventures, whose investment in PW is the largest commitment it has made to date.