Lightspeed Venture Partners to Lead $150 Million Funding Round for PhysicsWallah

Lightspeed Venture Partners is preparing to lead a significant $150 million funding round for PhysicsWallah, the edtech platform founded by Alakh Pandey. This deal comes at a challenging time for India’s edtech sector, where investor interest has waned due to a decline in online learning demand.

Lightspeed, known for its investments in successful edtech ventures like Bhanzu, Teachmint, and previously Byju’s, has issued a term sheet valuing PhysicsWallah at $2.6 billion pre-money. This valuation marks a substantial increase from the company's valuation of approximately $1.1 billion in 2022, reflecting its impressive growth trajectory.

Sources familiar with the negotiations revealed that the funding round, initially targeted at $250 million with a valuation over $3 billion, has been scaled back. Despite the reduction, the deal would still represent a notable upround in a sector that has seen considerable challenges following the pandemic’s peak.

If finalized, PhysicsWallah's valuation could rise to between $2.7 billion and $2.8 billion post-money. This uptick would be a rare occurrence in the global edtech market, which has struggled since the return to in-person education.

PhysicsWallah, which initially raised $100 million in mid-2022, rapidly achieved unicorn status within two years of its inception. The company's offerings have expanded from test-prep learning to include upskilling, K-12 education, and offline tuition centers.

PhysicsWallah’s revenue growth has been remarkable, increasing from Rs 25 crore in FY21 to Rs 780 crore in FY23, with projections of over Rs 2,900 crore for FY25. However, aggressive expansion has impacted profitability, with a drop to Rs 6 crore in FY23 and reported losses in FY24. The company has made strategic adjustments, including downsizing operations in Kota and relocating teachers, to address these financial challenges.

Founded in 2020 by Alakh Pandey and Prateek Maheshwari, PhysicsWallah competes with other major players like Unacademy, Vedantu, and Byju’s. The platform's innovative approach to education continues to attract significant investor interest, despite the current market conditions.