As many as 424 employees have been laid off by ed-tech company Vedantu. This is about 7 per cent of its workforce. According to its co-founder and Chief Executive Officer Vamsi Krishna, the company is expecting a scarcity of funds in the coming quarters amid a slowdown in global financial markets.
A few teams and projects will have to be deprioritized and thus will let go of some employees, Krishna said in a blog, reported Moneycontrol. This comes after the edtech sector in India is slowing down with schools and physical coaching classes reopening, due to decreasing Covid-19 cases across the country.
This is the second round of layoffs for the edtech unicorn in May as it had already laid of 200 employees or about 3.5 per cent of its workforce earlier this month.
“Currently, the external environment is tough. War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters," Krishna told the company’s employees in a blog.
The Tiger Global-backed edtech organisation wants to create a runway for at least 30 months without compromising on its core value which is student centricity, Krishna said. Vedantu will focus on reduction in customer acquisition cost through innovation and automation around operations, he added.
“With Covid tailwinds receding, schools and offline models opening up, the hyper-growth of 9X, Vedantu experienced during the last 2 years will also get moderated. For long term sustenance of the mission, V would need to adapt too," Krishna added.
Vedantu has done a comprehensive review of all its projects, and mapped them into core and non-core projects, it claims. This helped rationalising the ones that were not in sync, the CEO added.
He further added that employees who will be reconsidered will receive an email for a one on one discussion with the HR and their leaders. The company will further extend benefits such as health benefits for the employees and their families till August 5. Krishna also said that the company will be extending access to 15 doctor consultations and discounted pathology and pharmacy services through Practo till April 29 next year.
With this, Vedantu joins other edtech companies including Unacademy, and Lido Learning in laying off employees. While Unacademy has laid off 10 per cent of its workforce or 600 employees, Lido Learning has let go of more than 1,000 employees. The edtech sector has got only one unicorn in 2022 so far, as compared to three in 2021.
Last year, BYJU’s was in talks to buy Vedantu. The acquisition was likely to be around $600-$700 million, however, no deal was finalised. The live learning platform, meanwhile, had said that they are “not considering" selling the platform.
The platform was also is in talks to raise $100 million in 2021 instead of the rumoured acquisition by Byju’s. Around 60 million dollars was to contributed by existing investors, which includes Coatue Management, GGV Capital and Tiger Global Management. It was the fifth company to turn unicorn after Byju’s, Unacademy, UpGrad and Erudtius. Unicorns are privately held companies that valued at over a billion dollars.