Edtech unicorn PhysicsWallah (PW) has successfully closed its Series B funding round, raising $210 million through a combination of primary and secondary transactions. The funding round was led by Hornbill Capital, with participation from Lightspeed Venture Partners and existing investors GSV Ventures and WestBridge Capital. This round has propelled PW’s post-money valuation to $2.8 billion, marking a significant 2.5X increase from its previous valuation of $1.1 billion.
Founded by Alakh Pandey in 2016, the profitable edtech firm had previously raised $102 million in its maiden funding round from WestBridge and GSV Ventures. The latest investment represents one of the largest primary capital raises in the edtech space in recent years, signaling renewed investor confidence in the sector after a challenging period.
A Signal of Recovery for Edtech
The Series B funding round comes at a time when the Indian edtech sector has been navigating turbulent waters. Following the reopening of educational institutions post-pandemic and a series of corporate governance challenges, notably at Byju’s, edtech investments had significantly declined. In 2023, edtech funding fell to $321 million, a sharp drop from the $4.1 billion raised during the sector’s peak in 2021.
However, PhysicsWallah’s success in securing $210 million signals a modest recovery in the sector. According to a report by Tracxn, year-to-date funding in the Indian edtech ecosystem stood at $215 million. Despite this gradual rebound, the sector still has a considerable gap to close after the 87 percent drop in funding in 2023 compared to 2022.
A Strategic Focus on Expansion
PhysicsWallah has experienced significant growth, reporting a threefold increase in operating revenue in FY23, reaching Rs 772 crore on a standalone basis. The company’s expansion into offline education, which now contributes about 45 percent of its overall revenue, has been a key driver of this growth.
In an interview with Moneycontrol, PW Co-founder Prateek Maheshwari revealed the firm has over Rs 1,200 crore in its bank to support future expansion plans. “We will utilise the fresh capital wisely to scale up,” Maheshwari said. He also addressed the dip in profits in FY23, noting that the increased spending was a necessary step to capture market share. “FY25 will be our highest absolute EBITDA year,” added Alakh Pandey, Co-founder of PhysicsWallah. “Our revenue has already grown 2.5X in FY24, and our strategic decision to invest in offline centres, which many doubted, is now paying off.”
PW’s net profit saw a decline to Rs 16 crore in FY23, down from Rs 98 crore in FY22, which the company attributed to rising employee costs and non-cash expenses that led to an increase in total expenses. “The mandate for FY24 was to capture market share, which led to a dip in profits. However, we’re confident about the long-term roadmap. For FY25, we’re targeting more than 50% growth,” Maheshwari added.
Localized Education Hubs and Strategic Acquisitions
Looking ahead, PhysicsWallah plans to use its fresh capital to enhance its operations, with a particular focus on establishing localized education centers, referred to as “Micro Hubs,” to increase accessibility for students across India. The company has also expressed its intent to expand further into South India and continue its strategy of exploring mergers with community-driven education platforms to strengthen its market position.
“Our strategy is to avoid mega centers like Kota due to the high concentration of students and associated challenges. Instead, we are focusing on smaller, efficient centers closer to students’ homes. This year, we are heavily expanding in South India but will continue to grow Vidyapeth at a strong pace with micro hubs,” Maheshwari stated.
PhysicsWallah has already acquired smaller education firms such as Xylem Learning, PrepOnline, and Altis Vortex. “We are exploring opportunities in different geographies, particularly the South. We are also seeking smaller, growing platforms, particularly led by teachers, that share our philosophy of community building and have a brand affinity similar to Physics Wallah. We are not interested in large-scale acquisitions but rather in smaller entities,” Pandey explained.