upGrad’s teachable moment

In a studied con tr ar ian move, the ronnie screw val a-led ed tech company is on a hectic expansion spree

At a time when a growing number of edtech companies are laying off employees in a bid to conserve cash and focus on profitability, Ronnie Screwvala-led upgrad is on an expansion spree. Ahead of an initial public offering (IPO) planned for 2024, the edtech unicorn, which acquired that status in August 2021, has also chosen to streamline the corporate structure and expense out all costs related to mergers & acquisitions (M&AS) and growth capital in FY22 and partly in FY23. Over 15 cofounders from its M&AS are joining the leadership team. “The current fiscal year would largely be about on-boarding leaders for targeted roles across the upgrad spectrum to convert our business verticals into highgrowth levers,” said Mayank Kumar, co-founder and managing director.

The firm is setting up teams in Singapore, San Francisco, Indonesia, New York, West Asia, and London and looking to hire people as faculty, trainers, and experts. The firm has also signed new leases in the past few months for 335,000 sq ft of space across Mumbai, Bengaluru, Pune and Noida. The space will be utilised for setting up offices, offline campuses, housing for learners, studios, and training rooms for a growing roster of teachers and faculty. It is also looking for talent related to sales and marketing and content. Currently, upgrad has about 8,600 employees.

In India, upgrad has announced plans to consolidate all its M&A under the rubric of “One upgrad” by March-june 2023. “Domestic

expansion, in terms of business and people, is a priority for us,” said Kumar, adding, “We look at making some strategic hires to support our growth momentum.” The company also plans to hire over 1,400 team members between November 2022 and March 2023 in India and at offices outside the country.

Belying the funding winter in the edtech world, upgrad recently managed to raise funding of $210 million from marquee investors and family offices. These include Bodhi Tree (a joint venture between James Murdoch and Uday Shankar), the family office of Bharti Airtel, Narotam Sekhsaria family office and Artian Investments (the family office of Lakshmi Mittal of Arcelormittal). According to sources, the funding has helped the firm double its valuation to $2.25 billion.

The funding raised this year helped upgrad fuel its M&A strategy. In August this year, it acquired Exampur — one of India’s largest test-prep providers for government jobs — in a deal valued at ~125 crore. In July, it bought Harappa Education, an online learning institution, for ~300 crore. In May, upgrad acquired Insofe, one of the top data science institutes, for $33 million. It is in negotiations to acquire various companies in markets such as the US and Southeast Asia

Meanwhile, upgrad is scaling up its offline higher education platform with the launch of its new brand UGDX, which is focused on emerging digital technologies such as artificial intelligence, machine learning, cybersecurity, blockchain, and the Internet of Things (IOT).

With an investment of $30 million, UGDX will open 10 institutes next year located at the campuses of various universities globally.

This includes three institutes in the US, of which the San Francisco unit goes live in January 2023.

It is also setting up five institutes in Delhi and Chennai to add to its existing facilities in Mumbai, Hyderabad and Bengaluru. It will have one institute in Singapore and West Asia each as well. The 10 institutes would house 3,000-3,500 students each.

“We want to create the largest tech school,” said Screwvala, co-founder and chairperson, upgrad. He said the learners will have the flexibility of geographies that go from India to the US, Singapore and West Asia. The plan is also to have faculty recruitment in various geographies, including hiring 1,000 Phds.

At a time when the US is facing a $1.7-trillion student debt crisis, Screwvala said the firm is enabling universities to create their own faculty. They can be outsourced around the world and offer courses at a price that is substantially competitive. UGDX is slated to reach operational break-even in five quarters from its launch.

Screwvala pioneered cable television in India in the 1980s and then built a unicorn that was acquired by Walt Disney Co. He founded upgrad in 2015 along with Mayank Kumar, Phalgun Kompalli, and Ravijot Chugh. It now has a learner base of over three million across 100 countries and over 300 university partners. Its enterprise business has a client base of 1,000 companies worldwide.

The company to date has been capital efficient in raising external funding and spending it. It has raised a total funding of $631.8 million, according to the data platform Crunchbase.

Bucking the slowdown within the sector, upgrad said it has remained bullish with its programme completion rate of 80 per cent. About 40 per cent of the company’s total revenue is realised from Repeats and Referrals year-onyear. upgrad is on track to record an annual gross revenue run rate of $400 million during FY23. Of this, about 45 per cent of total revenue will be realised from its own-branded online courses and programmes.

upgrad reported its consolidated revenues for FY22 as ~692 crore, a 111 per cent increase from ~328 crore last financial year. But net losses widened almost three times to ~627 crore against ~211.1 crore in FY21, according to data accessed by the business intelligence platform, Tofler.

The losses are mainly on account of a significant rise in expenses during FY22. Total expenses at ~1,319 crore represented a 157 per cent jump from ~514 crore in FY21. But Kumar doesn’t think this will be a problem despite operating in a crowded field with competitors such as Simplilearn, Coursera, 2U, edx, Chegg, Skillsoft and Byju’s. “We are sure to hit the operational break-even for our multiple business lines in the next few quarters, thereby cementing our stature as the global higher edtech leader,” he said.