Physics Wallahan Indian edtech startup, has raised $210 million in fresh funding amid a tough funding environment for edtech companies in the country following the collapse of Byju’s, once the largest player in the sector.
Physics Wallah said on Friday that the Series B round was led by hedge fund Hornbill Capital, a joint venture between China’s Orchid Asia and India’s Hornbill, with “significant” participation from Lightspeed Ventures Partners, along with existing backers WestBridge and GSV. The round values Physics Wallah at $2.8 billion, a substantial increase from the previous valuation of $1.1 billion it secured in June 2022.
The startup has raised over $310 million to date. The new funding, the largest raised by an Indian edtech company since 2022, included a secondary transaction of about $35 million in which its founders and employees sold some of their shares.
Physics Wallah started her journey as a YouTube Channel in 2016where co-founder and professor Alakh Pandey posted his lectures for free to help students who, like him, lacked the financial means to enroll in premium tutoring classes. By 2020, Physics Wallah had grown to become the largest Indian educational community on YouTube, prompting Pandey to formalize his efforts into a company that now serves 46 million students in five vernacular languages.
“I always felt that I couldn’t crack the IIT entrance exam because I didn’t have access to quality education,” said Prateek Maheshwari, co-founder of Physics Wallah, explaining the motivation behind the startup’s mission.
India, the world’s most populous nation, has one of the largest education markets in the world, with approximately 250 million students attending school and around 4 million taking entrance exams to engineering colleges and medical schools each year.
Physics Wallah caters to a broad spectrum of this market, from third-grade students to those preparing for competitive entrance exams for engineering and medicine and government jobs. It even offers live classes that typically attract tens of thousands of simultaneous attendees.
The startup, which also operates around 180 physical centres, employs teaching assistants and artificial intelligence to answer student queries and has developed an app called AI Guru that helps students solve problems in their learning material. Physics Wallah has trained the AI with its own data, Maheshwari said.
One of Physics Wallah’s key strengths is the affordability of its courses, with prices starting at $50 for a full year. More than 5.5 million students are paying subscribers, according to the startup.
“We cover almost all exams in India, and for all the specials (JEE, NEET, GATE, UPSC and CAT), we are number one in terms of revenue and size of student base served,” Maheshwari said.
That traction is serving Physics Wallah well: It reported revenue of $96.2 million in the year ending March 2023, and the startup told britcommerce that revenue grew 2.5x between March of last year and March 2024. It expects its fiscal year ending March 2025 to be its most profitable yet in terms of EBITDA.
Dev Khare, a partner at Lightspeed and an early investor in Indian edtech startups, told britcommerce that many trends have converged to help Physics Wallah grow. “When you lower the price, things become much more accessible,” he said, pointing to budget hotel chain Oyo, fast-commerce startup Zepto, and storytelling platform PocketFM as other examples of startups in Lightspeed’s portfolio using similar strategies.
Maheshwari said Physics Wallah will explore inorganic growth opportunities with the new funds, but added that the company raised the capital largely because the funding was available and investors saw the value in doing so. The company, which has acquired about 10 companies in the past three years, is mulling an initial public offering, but cautioned that it would not make any immediate moves in the near term.
The new funding comes at a time when India’s edtech sector is facing significant headwinds. Online learning startups, which saw rapid growth during the COVID-19 pandemic when schools were closed, have seen a sharp decline in usage since then.
Bengaluru-based edtech major Unacademy has cut around 2,000 jobs from 2022. The company cut another 250 positions in July this year, citing the need to restructure to become profitable.
Byju’s, once India’s most valuable startup with a value of $22 billion, has seen a drastic decline over the past two years. The company is now facing the possibility of bankruptcy.
Maheshwari said that recent developments in the industry have not affected the market opportunities. “From a student’s point of view, things have not changed much post-COVID. The market is completely hybrid and students are enjoying the best of both worlds to strengthen their preparation,” she said.
Physics Wallah is a “rare combination of vision, execution and impact with a thriving 3C model: content, community and commerce,” said Manoj Thakur, founder of Hornbill Capital, in a statement. “We are excited to see PW using AI to not only help improve student outcomes but also their emotional well-being.”
No investment bank was appointed for the transaction.