Upgrad: Upgrad MD Mayank Kumar steps down as firm eyes $50-60 million raise

Edtech unicorn Upgrad cofounder and managing director Mayank Kumar has stepped down from his executive role to start a new venture, sources briefed on the matter said. Starting this month, he has significantly reduced an operating role at the Mumbai-based firm while pitching to investors for his new startup which is focused on placing skilled Indian labour abroad—especially in healthcare.

Coinciding with his departure is the company’s founder and chairman Ronnie Screwvala taking a more active role at the firm, these people said. Temasek-backed Upgrad is also in the final stages of closing $50-$60 million in funding from existing investors at a flat valuation of $2.25 billion, people in the know told ET. Screwvala holds 44% stake in the company, while Kumar has 8% and there are no changes in the shareholding pattern because of Kumar’s departure from the company.

Screwvala’s comeback is synced with the edtech’s plans for an IPO in India where the serial entrepreneur’s deeper engagement at the firm may bode well with public market investors, people aware of the thinking said.

“He (Mayank) has been pitching to investors and has discussed the idea to raise capital. Next, he will now register the firm and since October there is no operational role for him,” a person aware of the matter said. Another person confirmed Kumar pitching his new startup idea to investors.

These changes come at a time when the edtech sector has gone through an upheaval—especially because of the turbulence at Byju’s and the overall reset in the higher education space. Upgrad, according to an investor presentation by 360 One, recorded Rs 1,715 crore revenue in FY24, compared to Rs 1,366 crore in the previous year, a growth of 25.54%. “Upgrad has grown at a certain rate but the aspiration was to hit a higher growth rate,” a person aware of its plans said.

“Screwvala, thus, now will have more say in critical operating matters, especially with the IPO plans in the near future and companies trying to make the most of the current bull run for new listings, including the new-age firms,” one of the people mentioned above said.Screwvala and Kumar confirmed the restructuring at Upgrad. “Last October (2023) Ronnie & I discussed me being less active in the day-to-day operations of the company and for him to take a more active role. And so, since the start of this calendar year that is how we have moved roles between us at Upgrad,” Kumar said, adding he remains an 8% shareholder and that he is not ‘going anywhere’ while confirming his plans for a new venture in the blue collar and global talent mobility space. “…something not at all in conflict with Upgrad and so exploring options for starting up there in addition to my deep involvement at Upgrad,” he added.

“It’s exciting in a company’s life cycle for cofounders to move roles around and that is what we have done. None of us are going anywhere as we always had a mission to build for the long term and build to outlast all others. Mayank and I have also built a very strong team of colleagues around us, as this sector of skilling/workforce development and learning forever is just getting started,” Screwvala told ET.

They declined to comment on the funding plans.

ET first reported in Januarythat Upgrad was in talks to raise $100 million linked to its plans for the acquisition of US edtech firm Udacity. Later in March, Udacity was acquired by Accenture.

Upgrad has closed $35 million in debt financing from Evolution X, a joint venture between DBS and Temasek.

In recent weeks, edtech firms have seen big deals closing. PhysicsWallah closed a $210 million funding last month while higher education firm Eruditus is closing a $150 million funding.

Per 360 One, an investor in Upgrad with a 5.6% stake, the company clocked Rs 479 crore in revenue in Q4 FY24 (up 27.2% YoY), while the consumer segment saw the launch of new cohorts. “Enterprise revenue growth is robust and order book is Rs 104 crore in Q4 FY24. Upgrad turned profitable in skilling & reskilling business & placement services business in Q4,” the report as of June said. “Consumer segment customer acquisition cost improved from ~30% in FY23 to ~22% in FY24. Non-university programme revenue in Q4 FY24 is up by ~22% QoQ & ~81% YoY.”

All said, as of June, 360 One—formerly IIFL Wealth Management—estimated Upgrad’s valuation at $1.9 billion. This is in line with several edtech and consumer internet businesses getting revalued periodically. Investors also value their portfolio firms higher than the last round’s valuation in what’s a cyclical exercise.

Upgrad has tie-ups with over 20 tier 1/tier 2 universities offering more than 70 courses in the fields of data science, management, digital transformation, tech and law.