Physics Wallah in talks with investment bankers, preps for public listing

Edtech company closed a funding round of $210 mn last month, increased valuation to $2.8 bn

The two founders of edtech company Physics Wallah are in talks with investment bankers after closing a funding round of $210 million and as they prepare for an initial public offering (IPO), sources told ‘Business Standard’.

“It is still very early days but the founders have identified and are actively meeting with a set of investment bankers for a potential IPO sometime next year,” said a person familiar with the matter. Talks are in preliminary stages, but according to media reports the company is eyeing a potential issue size of $400-500 million. Physics Wallah, which was founded by Alakh Pandey and Prateek Maheshwari, would become India’s first publicly listed edtech company when its IPO is done.

Maheshwari told ‘Business Standard’ in April 2023 that Physics Wallah would look at an IPO in two or three years. The company’s plans to raise funds come at a time when the Indian edtech sector is going through a rough patch. According to data compiled by The Kredible, edtech startups raised $138 million in 21 deals in the first half of 2024. That is a sharp fall from $456 million raised in 2023, $2.3 billion in 2022 and $5.8 billion in 2021.

Physics Wallah’s listing plans have drawn comparison to edtech major Byju’s which was once the poster child of the Indian startup world but has seen its fortunes dwindle due to a spate of regulatory issues and disputes with investors.

Physics Wallah is among the few edtech unicorns -- a startup with a valuation of more than $1 billion -- to be profitable. While the company is yet to disclose its FY24 financials, it reported a revenue of Rs 771.76 crore in FY23 to be profitable for a third consecutive year. The company expects its best year in terms of EBITDA profitability in FY25. (EBITDA is earnings before interest, taxes, depreciation and amortisation)

Physics Wallah’s last fundraise made it the third largest edtech firm in terms of valuation, replacing UpGrad. Unacademy and Eruditus occupy the top two slots after Byju’s went into insolvency. In 2022, Byju’s was valued at $22 billion.

Physics Wallah closed a $210 million series B funding round last month, with its post-money valuation increasing to $2.8 billion. The round was led by Hornbill Capital, with significant participation from Lightspeed Venture Partners, alongside existing investors, GSV Ventures and WestBridge Capital.

The Noida-headquartered company started as a YouTube channel in 2014. It has amassed some 46 million subscribers across more than 112 YouTube channels in five Indian languages.

The company has 5.5 million paid students, more than 14,000 employees and operates in 105 cities in India by using technology-enabled offline and hybrid centres.