After growing at breakneck speed in 2020 and 2021, edtech firms have had a reality check in 2022 as pandemic restrictions have loosened. Many, including Unacademy, Byju’s and Vedantu have already sacked employees to cut costs. Now, Unacademy will slash the pay packages of its founders and top management, and shut down its global test prep business, its CEO told employees in a note earlier today. The edtech bubble has well and truly burst.
Also in this letter:
■ MPs plan to raise Google Pay-PhonePe duopoly in Parliament
■ Uber lobbied leaders, used ‘stealth’ tech to block scrutiny: report
■ Twitter lawyers up to sue Musk, who responds with memes
Unacademy top brass to take pay cuts; firm shuts global test prep business
Unacademy cofounder and CEO Gaurav Munjal told employees in an internal note on Monday that the firm’s founders and top management will take pay cuts, and that the company will shut its global test preparation business to increase efficiency and cut costs.
In his words: “Even though we have more than Rs 2,800 crore in the bank (as of this morning), we are not efficient at all. We spend crores on travel for employees and educators. Sometimes it’s needed, sometimes it’s not. There are a lot of unnecessary expenses that we do. We must cut all these expenses. We have a strong core business. We must turn profitable asap,” Munjal told his employees.
He said the firm’s cofounders have already taken pay cuts, which will be extended to the rest of the firm’s top management team soon.
“We have to do an initial public offering (IPO) in the next two years. And, we have (to) turn cash flow positive. For that, we must embrace frugality as a core value,” he added.
Note-worthy: This is the second such note Munjal has sent his team in recent months. In May, he told employees that the funding winter had arrived and said the company must change its ways.
Unacademy is one of several startups – including many edtech firms – that have laid off employees amid the funding slowdown this year. It sacked around 1,000 employees in March and April, and another 150 in June.
Mfine merges with Lifecell: Meanwhile, troubled healthcare startup Mfine said it is merging with the diagnostics arm of Lifecell International, a genetic testing service provider, in what is being considered a distress deal. LifeCell’s diagnostics business and MFine will merge to form a new entity called LifeWell.
We reported on May 23 that Mfine had laid off around 500 employees, about half of its workforce, as it struggled to cope with the funding winter.
MPs plan to raise Google Pay-PhonePe duopoly in Parliament
Indian lawmakers are becoming wary of the tight grip that two foreign-owned apps – PhonePe and Google Pay – have on the UPI ecosystem, PTI reported, citing unnamed MPs.
Several MPs, including some from the BJP, said they plan to raise the issue during the upcoming monsoon session of Parliament, and during meetings of the relevant Parliamentary panels.
They said it was not good that a few apps – especially foreign-owned ones – were dominating UPI, as this could lead to systemic risks.
None of them agreed to be identified, saying their respective parties were yet to take a formal position on the matter.
Duopoly: According to data from the National Payments Corporation of India (NPCI), which created and runs UPI, the more than five dozen registered UPI apps at the end of June accounted for 5.8 billion transactions with a total value of over Rs 1 lakh crore (trillion) during the month.
However, the top-two players — Walmart-owned PhonePe and Google Pay — accounted for more than 81% of the total volume and nearly 84% of the total value of UPI transactions.
Including PayTM, the share of the top three players was a staggering 96%.
UPI market cap: Since March 2021, NPCI has been planning to implement rules that would cap the market share of any single UPI app at 30%.
These rules are currently set to take effect in January 2023. But in June we reported, citing sources, that NPCI may extend the deadline.
Uber lobbied leaders, used ‘stealth’ tech to block scrutiny: report
Ride-hailing giant Uber lobbied political leaders, channelled money through tax havens and used a “kill switch”, among other unlawful means to expand its operations, according to a report by The International Consortium of Investigative Journalists.
Tell me more: As per the report, Uber lobbied government officials, including former President Barack Obama’s aides, to drop investigations, rewrite labour and taxi laws, and ease background checks of its drivers.
It also deployed a kill switch — which cut access to Uber servers – to prevent authorities from finding evidence against the company during investigations in about six countries.
Soon after the reports were published, Uber spokesperson Jill Hazelbaker released a written statement which acknowledged the company’s “past mistakes” but said Uber was a “different company” under present CEO Dara Khosrowshahi.
“When we say Uber is a different company today, we mean it literally: 90% of current Uber employees joined after Dara became CEO,” wrote Hazelbaker.
Tweet of the day
Twitter lawyers up to sue Elon Musk, who responds with memes
Twitter has hired the law firm Wachtell, Lipton, Rosen & Katz LLP, to sue Elon Musk two days after the Tesla chief executive cancelled his $44 billion deal to acquire the company, saying the company failed to show him accurate data regarding spam accounts.
Promise to fight: Soon after Musk said he was cancelling the deal, Twitter chairman Bret Taylor vowed to fight him in a Delaware court. Some reports said the company holds the upper hand, with Musk liable to pay a $1 billion breakup fee under the agreement.
LG Energy Solution to supply EV batteries to Mahindra: report
Last week, Mahindra raised $250 million from British International Investment for its new EV unit at a $9.1 billion valuation, and said it plans to launch five electric SUVs over the next five years. According to another Reuters report, the company also plans to invest in a battery-cell company to hasten its EV ambitions amidst rising competition from rival Tata.
ETtech Done Deals
■ Biotech startup String Bio raised $20 million from Woodside Energy Group, Ankur Capital, Dare Ventures, Redstart, and Zenfold Ventures. The company’s solutions are used to create products related to animal nutrition, agriculture and other emerging markets.
■ Solar financing platform Aerem raised $2.5 million in a funding round led by Blume Ventures. The company said it would use the fresh funds to grow its loan book and build its tech platform.
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Ruchir Vyas in New Delhi. Graphics and illustrations by Rahul Awasthi.