Skorion Technologies Pvt Ltd, which runs learning platform Udayy, has shut down its operations and laid off entire workforce, comprising up to 100 staff, a top top executive told VCCircle.
The company has decided to return up to $8.5 million to its investors, out of the total $13 million raised during its operations, said Saumya Yadav, Co-Founder and CEO of Udayy.
Yadav said, “Post our funding round of $10 million which was led by Norwest, we started noticing that a lot of parents who were paying using our products started asking for refunds as schools started to reopen. Post this, kids did not have enough time to use the product after schools were opened. Basically most of the parents were forced into this online learning and a section of them wanted to go back to old ways.”
“We were a pandemic company, we took a bet on live learning, we did not know how things will turn up but our rationale was even after pandemic we took a bet that a lot of people will stick around once they get used to this. But what we noticed was even though demand to learn English exists, which was our core offering, people were not willing to spend money or time anymore,” she added.
The development was first reported by Entrackr.
The company also looked at other options such as pivoting to a different model and selling the company but decided to close down the operation as pivoting into other models did not look like a good use of time and capital, Yadav said.
Since December the startup evaluated different pivots such as offline centres and free app
Yadav says it was a good decision to not pivot as this is not a good market and the path towards monetization was also not clear.
“We could have spent a lot of money and then decided to monetize it but it would have been an unclear path, we also looked at partnering with the school but it would within no time turn us into their competition. Some of these ideas were evaluated deeply,” she added.
The company has provided severance to employees and teachers with employment assistance to all the workforce consisting of 100 people.
“We always prioritized transparency and kept all our employees in the loop, we had less attrition due to this, in terms of assistance I have personally contacted 35-40 companies to place everyone. We have tried our level best to provide the transition to employees, it was our moral responsibility and we have tried to do the best,” Yadav said.
Overall Yadav is still very bullish on edtech as she asserts many problems exist but the challenge is it is not easy to build a business around it and there are multiple business models that companies are trying to build which are capital intensive, but some models have survived till now because capital was available in the market.
Udayy was founded by Yadav, Mahak Garg, and Karan Varshney, It is a live learning platform for students of 1 to 5 grades.
In January 2021, the company raised $2.5 million in a seed funding round led by Alpha Wave Incubation (AWI), managed by Falcon Edge Capital and InfoEdge Ventures.
Edtech space has recently a downturn amid a funding crunch in the sector, this week, the learning platform for non-academic skills FrontRow laid off around 30% of its workforce primarily in sales.
Multiple startups across sectors have recently asked employees to go, potentially in a bid to conserve capital in a difficult funding environment.
This month, digital health platform MFine laid off over 50% of its staff due to a lack of funds to pay salaries. Earlier this month, the used cars platform Cars24 asked 600 employees to leave and edtech startup Vedantu laid off 424 employees.
In March and April, Unacademy, operated by Sorting Hat Technologies Pvt. Ltd laid off nearly 800 employees.
Earlier this year, another edtech startup Lido Learning asked 1,200 of its employees to resign, saying that it was looking to wind down its operations amid a funding crunch.
Social commerce startup Meesho laid off 150 employees last month. In February, OkCredit, which is backed by marquee investors including Tiger Global and Lightspeed, laid off around 40 employees.
Notably, most of the startups that have laid off employees had raised significant funding last year. Cars24 raised $300 million in equity and an additional $100 million in December 2021, at a valuation of around $3.3 billion.
Vedantu became the fifth digital learning startup in India to hit unicorn status after raising $100 million (Rs 740 crore) in its Series E round led by Singapore-based impact investor ABC World Asia in September last year.
A unicorn is a startup with a valuation of at least $1 billion.