Edtech firm PhysicsWallah is near to securing a $150 million funding support by Hornbill Orchid, with extra cooperation from venture capital firm Lightspeed Venture Partners.This round is set to value the profitable edtech company at $2.8 billion, a significant increase from its $1.1 billion valuation during its last round in 2022, where it raised $102 million.
Hornbill Orchid Leads the Investment
Hornbill Orchid, a joint venture between China’s Orchid Asia and India’s Hornbill Capital, is expected to inject $70-80 million into the round, according to a report by The Economic Times. The company’s previous investors include Westbridge Capital and edtech-focused GSV Ventures, both of which have backed PhysicsWallah in earlier stages.
Since early 2023, PhysicsWallah has been seeking to raise $250-300 million at a $3 billion valuation. However, the edtech sector has been grappling with a funding slowdown, largely due to a post-pandemic decline in demand and governance concerns, particularly after the troubles at industry giant Byju’s. "The topline numbers have been impressive. They were at $300 million revenue with pure software sales...it’s a pull product...our issue was the valuation was steep," commented an investor who assessed the company.
Financial Performance and Expansion Plans
In FY23, PhysicsWallah reported a sharp 91% drop in profits, totaling just Rs 9 crore, following significant capital expenditure in 2022. The funds were used to establish offline coaching centers under the PW Vidyapeeth brand. Currently, 140 centers are operational, with a goal of reaching 200 by the end of the year. Despite the dip in profits, the company’s revenues surged by 243% to Rs 804 crore in FY23, with a revenue target of Rs 2,400 crore for FY24. The company is yet to file financial results for the current fiscal year.
The broader edtech sector is facing headwinds, as evidenced by fellow edtech firm Eruditus, which is also in discussions to raise $150 million from private equity firm TPG. This would be Eruditus’ first major fundraising since 2021 when the sector was booming.
PhysicsWallah has also faced internal challenges, with three of its top teachers departing early last year due to disagreements with founder Alakh Pandey. The teachers have since launched their own edtech YouTube channel. Additionally, accusations have surfaced between teachers, with claims of bribes from rival firms, including Adda247, another company backed by WestBridge Capital.
With inputs from ETimes
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