Physics Wallah said on September 20 that the round attracted new investors, including India-focused hedge fund Hornbill Capital and venture capital firm Lightspeed Venture Partners. Existing investors GSV Ventures and WestBridge also participated.
“We want to use this money to expand Vidyapeeth (PW’s offline centre). We also want to use this money when there are big M&A opportunities and we want to keep some funds aside for that,” said Prateek Maheshwari, co-founder of Physics Wallah. Mint.
Expansion Funds
Physics Wallah has been actively growing over the past two years, entering new verticals and investing in inorganic growth opportunities. The new investment is expected to further fuel the company’s growth momentum.
Physics Wallah has spent ₹Vidyapeeth and Pathshala are its hybrid verticals with revenues of Rs 400 crore.
“We are likely to reinvest ₹The capex will be Rs 7-10 crore next year (for offline expansion),” Maheshwari said.
Physics Wallah plans to add 40 new centres in the next one year and enter cities like Nashik, Pune, Dehradun, Coimbatore, Hyderabad and Chennai, besides expanding its presence in existing cities. The company is also looking for acquisitions. According to Maheshwari, the company has used about 60% of its last round of funding for mergers and acquisitions.
“We still have 40% of the funds left in the last round of financing. After this round of financing, our funds will exceed ₹2,500 crore,” he added.
Founded by Alakh Pandey and Maheshwari, Physics Wallah became a unicorn in 2022 after raising $100 million in its first round of funding from Westbridge and GSV. So far, the company has acquired six startups including FreeCo, iNeuron, Only IAS, and Utkarsh Classes.
Physics Wallah is currently on the lookout for companies that can help it expand its presence in South India. The company is also looking to acquire companies with rich content in growth verticals. For growth, Physics Wallah plans to target Curious Junior (a small group classroom program for K-10 students) and PW Skills (its skills vertical) as growth drivers.
“The K-10 segment has not been adequately addressed by the Indian startup ecosystem, so Curious Junior is the company’s primary focus. But we are also working on solving the country’s skilling problem through PW Skills,” said Maheshwari.
Positive outlook
The focus on growth has come at a cost. The company, once hailed as India’s only highly valued and profitable edtech startup, is said to have swung into losses in FY2024, largely due to unprofitable offline operations. To be sure, the company has yet to officially announce its FY2024 financials.
An industry executive said Mint It is thought that the company’s rapid expansion plans may have exceeded expectations.
“As a venture-backed company and one of the few in the edtech space that is doing well, it is expected that it will need to aggressively drive growth to secure the next round of funding,” said the executive, who requested anonymity.
However, Maheshwari expects the company to become profitable next year as the offline business starts to become profitable. He said that in fiscal 2025, the company has started generating cash in the first and second quarters, while the cash flow was negative 18%.
“In the current market, I am becoming the dominant player. Now is the time when you should go for the largest market. You should not overemphasize profitability. If you also look at last year’s numbers, you will find that our losses are not that big. It is a prudent decision and we are more focused on experience and numerical growth,” he said.
Public listing
The new investment in Physics Wallah marks a positive development for India’s edtech sector, which is facing falling demand, reduced funding and waning investor interest.
Manoj Thakur, Founder and Managing Partner, Hornbill Capital said, “The challenges in edtech are tied to very specific business models. PW has proven that this is only possible with the right student-led strategy, high-quality content, affordability to a wider student base, and adoption of technology. Hence, this is a huge opportunity for us.” Mint.
Thakur’s inclusion in Physics Wallah’s share structure indicates that the company is preparing for the next major milestone: a public listing. Although no specific timeline has been determined, the company and its investors believe that Physics Wallah is ready for a public listing.
“We are strengthening our finance team and governance processes…Manoj has taken many companies to the public market, which attracted us to Hornbill, and Manoj personally, because they are the right advisors for us to prepare for the IPO and take us to the public market,” said Maheshwari.
The executive previously said that while current market conditions may not be suitable for education technology companies to go public, Physics Wallah’s IPO could change that perception.
“The key to a successful IPO for Physics Wallah is ensuring it returns to profitability,” the executive added.
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