In an internal email to employees, Munjal said that the company must focus on frugality as a core value to turn cash flow positive.
Unacademy co-founder and CEO Gaurav Munjal has said that the ed-tech start-up will not be renewing its association with the Indian Premier League (IPL) in 2023.
Responding to a user on Twitter, he tweeted, “The last three years with the IPL were amazing. Our brand went to another level. I recommend all upcoming brands to partner with the IPL. Our focus has changed. Hence, the decision to not do IPL next year.”
Earlier on Monday, Munjal told employees, in an internal email, that to turn cash flow positive, the company “must embrace frugality as a core value.” The company is preparing to launch an IPO in the next two years.
This shift in focus to frugality comes when start-ups are facing crunch in funding. Citing the threat of 'funding winter', Munjal said in May that the company would focus on organic growth, instead of splurging on advertising. As per The Economic Times, the ed-tech unicorn laid off about 1,000 employees in April.
In Monday’s mail, Munjal wrote, “Even though we have more than Rs 2,800 crore in the bank (as of this morning), we are not efficient at all. We spend crores on travel for employees and educators. Sometimes, it's needed. Sometimes, it's not. There are a lot of unnecessary expenses that we do. We must cut all these expenses. We have a strong core business. We must turn profitable ASAP.”
Among the cost-cutting measures are paycuts for the founders and management, restrictions on business class travel for CXOs, shutting down Global Test Prep which has failed to find PMF (product market fit).
In 2020, Unacademy came on board as an official IPL partner. The partnership was slated to cover three seasons, ending with IPL 2022. As per media reports, the three-year deal was worth Rs 120-130 crore.
Over the last two years, the IPL has become the default media vehicle for ed-tech, fin-tech, gaming and e-commerce brands. Flush with VC funding, these brands, some of which are unicorns, overspent on IPL in the quest for new users and also establishing themselves.
During IPL 2021, ed-tech was the top advertiser category, according to a TAM study. However, in IPL 2022, advertising by ed-tech brands declined and it was the fourth most advertised category.
Recently, Disney Star India and Reliance-backed Viacom18 won the television and digital media rights, respectively, for a whopping Rs 48,390 crore. This eye-popping sum is likely to drive up IPL advertising rates.
Unacademy’s announcement to end its association with the annual sporting event could signal a bigger trend of start-ups re-evaluating their extravagant ad spends; especially on IPL.