PhysicsWallah Nears $150 Million Funding Round, Valuation Set to Soar to $2.8 Billion

PhysicsWallah is on the verge of a major funding boost, as the Noida-based edtech unicorn is finalizing a $150 million funding round led by Asian hedge fund Hornbill Orchid. The deal is expected to elevate PhysicsWallah’s valuation to a staggering $2.8 billion, marking a 150% increase from its previous valuation of $1.1 billion.

Hornbill Orchid Takes the Lead

Hornbill Orchid is poised to contribute $70-80 million to the round, with additional capital expected from venture capital firm Lightspeed, known for backing Byju’s. This marks the second major funding round for PhysicsWallah since its inception in 2016 by Alakh Pandey, who initially started the platform as a YouTube channel providing coaching for engineering and medical entrance exams.

PhysicsWallah first entered the unicorn club in 2022, raising $102 million at a $1.1 billion valuation from WestBridge Capital and GSV Ventures. The current round is considered one of the largest capital raises in the Indian edtech space this year, following a prolonged slowdown in the sector.

A Challenging Edtech Landscape

The edtech sector in India has experienced fluctuating fortunes. Data from Tracxn reveals that the sector saw $215 million in funding so far in 2024, compared to $321 million in all of 2023. These figures are still far from the sector’s peak in 2021, when Indian edtech companies raised a record $4.1 billion. Investors have grown cautious, especially following corporate governance issues at Byju’s, leading to concerns about governance across Indian edtech startups.

Rapid Growth Amidst Consolidation

PhysicsWallah’s meteoric rise has been bolstered by its aggressive expansion into the offline space. In FY23, the company’s operating revenue surged threefold to ₹772 crore, with offline business contributing a third of the total. However, this rapid growth came at the cost of profitability, with net profits dropping from ₹98 crore in FY22 to ₹16 crore in FY23 due to higher employee costs and non-cash expenses.

The company’s inorganic growth strategy—acquiring smaller firms like Xylem Learning, PrepOnline, and Altis Vortex—has significantly bolstered its revenue by ₹500 crore. Despite challenges, PhysicsWallah remains focused on accelerating its growth trajectory, aiming to solidify its position as a dominant player in India’s edtech sector.

Sector-Wide Mergers and Acquisitions

The Indian edtech industry is witnessing a wave of consolidation. Google-backed Adda247 acquired test prep firm Ekagrata Eduserv, Noida-based Schoolnet took over Genius Teacher, and Allen Career Institute acquired Doubtnut. PhysicsWallah’s recent moves reflect a broader trend of well-funded players absorbing smaller competitors to gain market share.

As PhysicsWallah continues to expand, its latest funding round, led by Hornbill Orchid, is expected to further fuel its growth in an increasingly competitive market. With plans to drive innovation and increase its offline footprint, PhysicsWallah is positioning itself as a formidable force in the edtech space.