‘Largest consumer internet firm will be from edtech’

Having turned a unicorn, made five acquisitions and raised three rounds of funding—all in the course of a single year, 2020—edtech startup Unacademy is looking at 2021 with a focus on “building things for India”.

Now valued at $2 billion, the Bengaluru-based firm plans to build Graphy, which allows users to explore stories, ideas and original content through video, audio and quizzes, and create another standout product, founder and chief executive Gaurav Munjal said in an interview. Edited excerpts:

What is Unacademy’s outlook for 2021?

Our goal for 2021 is to grow our test preparation business and come up with another product. Now that can be either Graphy or Mastree (an online platform for kids to hone communication skills), we don’t know which, but efforts are going on to make sure we come up with another breakthrough product that is 10X better than anything else in the market. We want to be the No. 1 brand in education in 2021 and want to be ahead of everyone else by a huge margin, start generating cash in our test prep business and win in another market through another product, which we don’t know as yet.

Are there are more acquisitions in the pipeline?

In 90% of the cases, I am looking for a team or a particularly unique selling proposition that they have, but we don’t. For example, we acquired WiFiStudy, a Jaipur-based YouTube channel on exam preparations because it was the leading channel in YouTube distribution and they knew how to scale YouTube better than us in a core test prep market. So we got them and learnt the insights and using that, we launched many more YouTube channels. We have built a strategy where we now do more than 200 million video views a month on YouTube on core education content. Just as an example, T Series does 3 million views a month. We rarely acquire a company because of the revenue. There are 2-3 more acquisitions in the pipeline.

When do you see Unacademy turning profitable?

We want to be cash-flow positive in our test prep business in 2021, and in our other businesses, we will continue to invest to gain a larger market share.

We have close to $300 million in the bank right now. We are not burning a lot of money, we have a huge run rate but at some point, if we have to add the right investor to the cap table, then we would surely do that. For example, the last fundraise that Tiger Global led, we had the option to raise 2X the amount we ended up raising, but we didn’t take more money. We wanted them because they are good investors to have on the cap table.

Is an IPO the next milestone?

I want to now build a sustainably profitable business and in 5-6 years make sure we have one of the most successful IPOs this country has seen.

What about international expansion?

Except for Graphy, I have no international plans. India is a very, very deep market, especially in education, and we want to continue to focus on building things here. Our usage is very high in tier-II and III both for Unacademy and Mastree. In fact, 70% of our users are based in small towns.

Do you expect edtech sector to undergo consolidation?

It is all about survival of the fittest. If a new company has a USP and the team and brand is good, the market is large enough for many players, but everyone needs to find those 1-2 things they are really good at. I encourage all entrepreneurs to start more education firms as the market is right, the ability to create an impact is huge, and Indians pay for education.

Education will follow a similar trend like entertainment did and the impact that YouTube, Netflix and such platforms have had on us. Today, we have this infrastructure where people might not have schools or offline institutes but they will have a $100 smartphone that opens doors for them to get access to the best teachers of the country at one-fifth the price; so imagine the impact. This is just the beginning, and I think the largest consumer internet company in India will be an education company.

How is Unacademy different from other edtech firms?

We are a forward-thinking, product-first, technology-first company; others are content-first companies. Content is super important too, but we thought of technology-first solutions instead of saying we have to deliver content only. If you see technology as an enabler, then you will be like an online site that streams shows at a particular time. But if you think of technology-first solutions, then you will be like Netflix, where you can watch whatever you want at any time you wish. We are like the Netflix of education.