How Unacademy’s Business Model Is Propelling Its Growth

In 2010, with a deadbeat recording equipment and nothing but a strong will to impart quality education to students around the world, Gaurav Munjal made up his mind to start a youtube channel that taught students conventional school subjects in a not so conventional way. A decade later, Unacademy is valued at half a billion dollars and well on its way to becoming a unicorn second only to Byju’s.[1]But wait a second, something doesn’t add up. How does a youtube channel go-ahead to be valued at more than half a billion dollars? Can a single youtube channel actually make that much money?

Credits to the people sitting on top of the edtech giant, because Gaurav, along with three of his partners, has been able to pull Unacademy from a youtube channel to a center for millions of students to prepare for esteemed public examinations, and eventually making money out of it. And they have the company’s business model to thank for it.

In this article, we’re going to take a look at how Unacademy makes money, what it’s business model is, and whether or not it’s been a profitable venture. But before we get there, let’s look at Unacademy’s journey so far.

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How Unacademy Came Into Being

When he was a college student, Unacademy founder Gaurav Munjal started his Youtube channel, but then took some time off to focus on other projects. After selling his startup to Common Floor[2], he started giving his full attention to Unacademy, soon followed by Hemesh Singh and Roman Saini. The trio then went on to expand their project from a simple channel to a platform where educators can come together to create courses and teach a lot more people and aspirants.

Today, Unacademy has been grown to a platform that has around 10,000 highly qualified educators and over 13 million users, as of June 2019[3]. Now, paying these educators will require huge amounts of money, and not surprisingly, the edtech company has that money (and a lot more). Naturally, the question surfaces: How does Unacademy earn money?

Business Model

With around six separate Youtube channels to its name (dedicated to Educators, JEE, and UPSC aspirants among others), accumulating a little more than 8 million subscribers, and over 250 million video views. But the revenue from just these channels, although really good, isn’t enough for a company to be valued at $500 million. So how does Unacademy actually make money?

The answer is through what we call a Freemium Business Model. A Freemium business model is where a company offers some of its services for free, but to access high-quality content and all of its services, will charge a small subscription fee.

Unacademy does exactly this with its platform. While all of its classes are free (and, according to Gaurav, always will be[4]), it provides an Ad-free platform as well as access to live education classes exclusive to members who pay a subscription fee. It’s surprising how well this model has worked for them, as the platform has grown from 13 million to 20 million active users in February 2020.

To scale to such heights, Unacademy has accumulated over $198 million (USD) from seven rounds of funding. Clearly, they’ve started making money, but has it been profitable?

Crunching The Numbers – How much money do they make?

On the books, Unacademy recorded spending about 112 crores (INR) to see a little over 10% in cash inflow (about 12 crores) in FY 2019. Its losses jumped from 23.58 crores to approximately 91 crores the same year. Compared FY 2018, where it reported just 28.82 crores in expenses, this was a 290% jump.

Although the numbers don’t seem to justify themselves yet, the 500% increase in revenue from paid subscriptions in just a year has certainly brought a positive outlook on the whole scenario, and we can expect the company to churn profit from this approach soon.

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Closing Thoughts

Unacademy has come a long way from being just another educational channel on the internet. It has surpassed expectations and greatly improved as a company – in terms of both finances and overall growth. A lot of the credits go to Gaurav and his partners for maintaining the standard of the company through the decade, and if they are able to improve their financials over the years, Unacademy can be one of the biggest companies to come out of India, impacting generation to come.