Edtech unicorn Unacademy founder Gaurav Munjal informed his employees that the company will resort to cost restructuring where a global business will be shut down, founders and management will take pay cuts and employees will have to let go of complimentary meals and snacks.
The move comes even as Munjal admits the SoftBank-backed company has Rs 2,800 crore as cash reserve.
“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,” said Munjal in an email with subject as ‘Frugality’.
“There are a lot of unnecessary expenses that we make. We must cut all these expenses. We have a strong core business. We must turn profitable as soon as possible,” Munjal said in an internal note to his employees.
The news was first broken by Livemint on Twitter.
In the emailed note, Munjal pointed out that the management and the founders have already taken pay cuts and shut down businesses that are not meeting targets.
“We will be shutting down certain businesses that have failed to find the product market fit (PMF) like the Global Test Prep,” the mail said.
Munjal stressed that the decision to do away with non-core privileges and perks - including drivers for senior management, free lunches for employees - was keeping the company at a distance from its aim to get listed.
“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,” the note said.
Unacademy declined to comment on further queries on the note.
This is Munjal’s second message to employees in the last two months. In May, Munjal had warned employees to work under ‘constraints’ citing threats of a potential ‘funding winter’.
“We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months,” Munjal had said on May 26.
In the meantime, Unacademy, run and operated by Sorting Hat Technologies Pvt. Ltd, has also increased its employee stock ownership plan (Esop) pool by 20% taking the pool size to 286 million options from 238.7 million options, regulatory filings showed.
In April, the edtech company had laid off nearly 600 employees comprising nearly 10% of its workforce, VCCircle reported.
In March, Unacademy had let go over 100 employees from its PrepLadder team amid “restructuring” of the organization and last month, it further asked 150 employees to leave after a performance improvement plan.
Earlier this month, Mint reported that startups are doing away with joining bonuses and offers of stock options besides reducing notice periods as they conserve cash to navigate a slowdown in funding. Instead, many of them are hiring from the available pool of retrenched employees where required, even as they brace for more layoffs.
Unacademy was valued at $3.4 bn in the latest fundraise that closed in August 2021, and counts global VC firms including Sequoia, Tiger Global, Softbank among others as its backers.
In June, Unacademy forayed into the offline learning space by rolling out its two coaching centres in Kota as most of the edtech players are starting to build their offline presence across India amid a slowing down in the sector after two years of hypergrowth as Covid-19 curbs have eased and students have started returning to physical classes.
