VCs view upGrad's acquisition as final 'bulk-up' before massive listing

Ronnie Screwvala-led upGrad, which has acquired multiple companies since 2022, including Harappa Education and Centum Learning, will acquire edtech startup Unacademy. Venture Capitalists view this as a final bulk-up before a massive public listing next year.

Founders of both edtech firms did not disclose the valuation, but said it is a 100% share swap deal.

upGrad’s acquisition spree shows it is trying to build a larger learning and career ecosystem, not staying limited to one format or segment. The company acquired 10 businesses between 2020 and 2022, which makes it clear that acquisitions are a deliberate growth strategy. Through this approach, upGrad can expand faster into new categories like skilling, study abroad, and job-linked learning, instead of building each capability slowly from scratch, Somdutta Singh, Founder and CEO of Assiduus Global, said.

Last month, the company acquired Internshala, with a target to grow revenue from Rs 45 crore to over Rs 100 crore in 18-24 months. "That suggests upGrad will focus on stronger distribution, more cross-selling, deeper product integration, and better career outcomes. In simple terms, the acquired company gets a bigger platform, more reach, and stronger monetisation support," Singh said.

Ujwal Sutaria, Founder and General Partner at TDV Partners, said for upGrad, this isn't just another notch on the belt; it’s a bid for total market dominance. "upGrad has traditionally owned the higher education and professional upskilling space. By acquiring Unacademy, it instantly absorbs a massive K-12 and Test-Prep audience. This creates a 'cradle-to-career' pipeline, where a student enters the ecosystem at age 12 and stays through professional retirement," Sutaria said.

He added that to command a premium IPO valuation, they need a diversified portfolio and a clear path to being the undisputed No. 1. Why the spree? In a consolidated market, the last man standing wins. upGrad is using its relatively stable balance-sheet to pick up distressed or reset assets (like Unacademy) to gain scale that would take decades to build organically, he explained.

A couple of months ago, upGrad walked away from acquisition talks due to valuation differences with Unacademy. During the pandemic period, Unacademy's valuation peaked at about $3.5 billion, but it subsequently dropped below $500 million.

Sunitha Viswanathan, Partner at Kae Capital, noted that a significant amount of capital flowed into edtech during the COVID years; however, in many cases, the sector struggled to demonstrate durable learning outcomes. As a result, investors have been more cautious post Covid.

But VCs mentioned that AI has the potential to fundamentally reshape the edtech sector. "Many of the ideas that the sector has long talked about, such as deeply personalised learning, a one-to-one tutor, or a patient learning coach, are now becoming possible at scale with AI. We are already seeing early examples of this with companies like Supernova that are building AI native learning experiences focused on improving how students actually learn. If implemented well, this shift could finally translate into measurable improvements in learning outcomes," Sunitha Viswanathan said.

Funding in edtech has become more selective, as global edtech venture funding fell to $2.4 billion in 2024, down 89% from the 2021 peak. Sutaria said funding has plummeted (down nearly 90% from its peak), but bigger bets are being placed on fewer players.

"VCs are now looking for EBITDA-positive growth. It is very difficult for a new, mid-sized edtech startup to raise Series B or C today. Investors prefer backing ‘platform plays’ (like this merger) that have the muscle to survive market volatility. If you are an edtech company, you’re struggling. If you are an education-AI company with 20% month-on-month growth, the checkbooks are still open," he said.