Edtech unicorn upGrad is reportedly in discussions to acquire US-based Udacity, as the latter has been exploring a sale for several months. According to a report by ET, Udacity is looking to sell a majority stake in the company through an equity swap. While the company was initially seeking around $200 million from a previous potential buyer, the negotiations did not materialize.
The current talks between upGrad and Udacity are said to be progressing well, with a valuation of approximately $100-120 million being considered. This valuation represents about 10-12 times its EBITDA, according to a source cited in the report.
Udacity, which offers programs in artificial intelligence, machine learning, and robotics, is estimated to have a value of over $100 million. However, the company is facing challenges in customer retention, particularly in its B2C business. Currently, a significant portion of its revenues, approximately 70-75%, comes from enterprise clients.
UpGrad, on the other hand, has denied the development to ET. The Indian edtech unicorn has been diversifying its portfolio, particularly in light of the challenges faced by its K12 segment following the reopening of academic institutions. It recently announced its entry into the Pacific region with the establishment of the upGrad Institute of Medical Sciences (UIMS) in the Republic of Vanuatu, focusing on medical training.
The potential acquisition of Udacity by upGrad occurs at a time when the entire edtech industry is grappling with various issues, including layoffs and mounting losses. UpGrad, led by Ronnie Screwvala, reported a widened consolidated net loss of INR 626.6 crore in the financial year 2021-22 (FY22) due to increased expenses.
Founded in 2011 by former Google executive Sebastian Thrun, Udacity joined the unicorn club in 2015 after raising $105 million in a Series D funding round, valuing the company at $1 billion. The company has prominent investors such as Andreessen Horowitz backing its operations. With more than 100 enterprise customers and collaborations with industry partners like Google, Mercedes-Benz, and NVIDIA, Udacity has established itself as a key player in the edtech space.
