Gurgaon-based Udayy, an edtech startup focused on students from kindergarten to eighth grade, has decided to shut down its operations as it was unable to maintain sustainable growth in the hyper-competitive edtech market.
Following this decision, the edtech startup has laid off its entire workforce. Saumya Yadav, one of the co-founders of Udayy, explains that the platform did not see a viable path toward business profitability with the lifting of COVID-19 norms.
The increased number of children returning to school led to requests for refunds and difficulty in acquiring new customers online, she explains.
“We had enough capital in our books, but the business no longer made sense in the offline world, customer acquisition cost became very expensive,” she told ET. “We had enough capital, but a post-pandemic lot of parents started asking for refunds, and kids did not have time as schools opened up.”
Saumya also said that all the employees, including tutors, have been paid severance amounts and almost everyone has been placed elsewhere. According to a report, Udayy had raised $10 million in funding in February 2022 from Norwest Venture Partners and other existing investors.
In January 2021, Udayy had raised $2.5 million in funding from Better Capital, Info Edge, Alpha Wave Incubation, and Kunal Shah. Notably, the startup has also returned around $8-8.5 million to its investors.
Karan Varshney, Mahak Garg, and Saumya Yadav co-founded Udayy in 2019 to offer learning and education services for students in the kindergarten to eighth class and was catering to around 5,000 students each month.
Udayy’s shutdown announcement comes at a time when several edtech startups facing difficulty in raising funds. Recently, Lido Learning, which had raised $10 million last September but had to fire 1,200 people in January, also closed its business last month. However, as per several media reports, Lido Learning is in talks with Reliance Industries for an acquisition deal.
“We had never existed before the pandemic, so the transition was very difficult. The market we had taken a bet on was not really existing and customer acquisition cost was going up heavily,” Saumya adds.