UpGrad Calls Off Unacademy Deal Amid Sharp Valuation Reset

India’s edtech consolidation narrative has hit a pause button. UpGrad has called off its proposed acquisition of Unacademy after months of discussions, citing valuation concerns and unresolved business challenges at the SoftBank- and Temasek-backed company, according to people familiar with the matter.

The development was first reported by PTI, which said the talks collapsed after upGrad assessed Unacademy’s business and found the valuation expectations misaligned with operational realities.

Unacademy, once valued at $3.4 billion during the 2021 funding boom, was being discussed at a valuation of around $290 million, a correction of more than 90 per cent from its peak.

What Stalled the Deal

According to sources cited by PTI, Unacademy’s founders pegged the company’s valuation at roughly $290 million when acquisition talks began. However, upGrad identified multiple business-related challenges during its diligence process.

“UpGrad identified a lot of challenges related to the business of Unacademy… therefore, the deal was called off,” sources told PTI.

Separately, Ronnie Screwvala, Founder, upGrad, confirmed the breakdown of talks, telling Moneycontrol and ET
“Yes, we are not proceeding basically due to valuation differences. While we cannot comment on what the numbers were, it is complete to say we could not agree on valuations.”

Under the proposed structure, Unacademy’s investors were expected to receive a minority stake in upGrad, which was valuing itself at around $2 billion, but the two sides failed to align on price and deal mechanics.

Unacademy’s Strategic Transition in Focus

The talks with upGrad unfolded during a period of transition at Unacademy. Earlier this year, co-founders Gaurav Munjal and Roman Saini stepped back from operational roles as part of a leadership reshuffle. The company subsequently appointed Sumit Jain, co-founder of Unacademy, as CEO of its core test-prep business.

Over the past two years, Unacademy has scaled back from aggressive category expansion, narrowed its focus to test preparation, and undertaken multiple rounds of workforce reductions as it adjusted to post-pandemic demand trends.

Despite the operational reset, Unacademy remains well capitalised, with approximately ₹1,100 crore in cash on its balance sheet. The company is now expected to evaluate its next steps independently.

ESOP Changes Added to the Overhang

The failed acquisition also comes amid employee concerns at Unacademy. In December, the company’s move to shorten the ESOP exercise window for former employees sparked backlash, prompting Unacademy to put the proposed changes on hold while it reviewed feedback.

While not directly linked to the upGrad talks, the episode highlighted the broader strain faced by late-stage startups navigating valuation resets, employee sentiment, and investor expectations simultaneously.

What the Deal Collapse Means for upGrad

For upGrad, walking away from the deal preserves optionality. The company continues to position itself as a profitable education platform with a focus on higher education and test prep, while preparing for long-term strategic outcomes, including a potential public listing.

The failed Unacademy deal does not rule out future acquisitions but signals a more disciplined, valuation-conscious approach in a market where scale alone no longer justifies pricing.

The collapse of the upGrad–Unacademy talks underscores a larger truth about India’s edtech sector: consolidation is likely, but on new terms. Valuations once driven by growth projections are now anchored to fundamentals, cash efficiency, and execution clarity.

For founders and investors alike, the message is clear: the post-pandemic valuation reset is still unfolding, and not every high-profile deal will survive it.