Amid sector struggles, Indian ed-tech startup Physics Wallah secures a $2.8 billion valuation.

• On Friday, Physics Wallah, an Indian education technology startup, announced that it had secured $210 million in funding at a valuation of $2.8 billion.
• Alakh Pandey, CEO of Physics Wallah, stated that the company would utilize the funds to grow its operations and make acquisitions.
• The collapse of Byju's, once valued at $22 billion, led to the funding.

On Friday, Physics Wallah, an Indian education technology startup, announced that it had raised $210 million to expand its business, including through acquisitions, amid difficulties in the sector.

The company's valuation has increased from $1.1 billion to $2.8 billion, thanks to funding led by Hornbill Capital and involving Lightspeed Venture Partners, GSV, and WestBridge.

Physics Wallah, established in 2020, is an Indian ed-tech company that provides free and paid courses for competitive exams. The company distinguishes itself by offering courses at an average cost of less than $50, making them affordable for children from underprivileged areas.

Alakh Pandey, CEO of Physics Wallah, stated in an interview with CNBC that the platform is not designed for a small percentage of the country or the world, but rather for the remaining 99% of students who cannot attend elite coaching classes.

The company offers a freemium business model, hosting courses on YouTube for free. For additional features such as homework and tests, students can pay.

In the fiscal year ended March 2024, the company reported a 250% increase in revenue year-on-year, and Pandey predicted the highest absolute EBITDA in the current fiscal year. EBITDA is a measure of profitability used by companies.

Pandey stated that the company is willing to make acquisitions as long as it gains access to fresh content and customers.

Pandey stated that consolidation is an option if it involves serving different geographies and prioritizing content and community.

Xylem Learning, an ed-tech company based in Kerala, India, received a 50% stake from Physics Wallah last year.

India ed-tech issues

Pandey and Maheshwari, co-founders of the company, stated that their focus is on certain trends, such as the integration of online and physical classrooms, as well as expanding internet access to rural areas in India. This enables children from underprivileged backgrounds to obtain education.

The aggressive expansion of several companies during the Covid pandemic led to the ed-tech boom in India.

The expansion of the ed-tech sector resulted in the collapse of Byju, a company once valued at $22 billion, which is now facing insolvency proceedings in India. The reasons for its fall include aggressive acquisitions, high marketing expenses, and mismanagement.

Pandey stated that his company's focus is on the content it provides and the outcomes achieved by students, while discussing some of the failures in the ed-tech sector in India.

Pandey stated to CNBC that when reading or hearing about previous actors, the focus is solely on their high valuations, the funds they have raised, and the amount of money they have made.

"Changing the lives of students is the true purpose of education, not just growing and talking about valuations like other startups."

Despite the failures, the market is still expanding, as stated by Maheshwari, who also spoke to CNBC.

Maheshwari stated that although a few players have struggled to perform post-Covid, the number of learners is increasing year-on-year.

Pandey stated that Physics Wallah will have an initial public offering, but he did not provide a specific timeline.

We will do an IPO and have a strong governance in the company. We are forming a board of independent directors, but the exact date of the IPO is not important to us as we are running the company like a public company, said Pandey.