Unacademy, once a one of India’s most valuable edtech startups, is set to be acquired by rival upGrad in an all-stock deal that would bring together two major online learning platforms in the country.

On Sunday, Unacademy co-founder and CEO Gaurav Munjal said in a post on X that the companies had signed a term sheet for upGrad to acquire Unacademy in a 100% share-swap deal, adding that the valuation would not be disclosed until the transaction closes. The announcement comes more than three months after Munjal said that Unacademy’s valuation had dropped below $500 million — down roughly 85% from its pandemic-era peak of $3.5 billion in 2021.

India’s once-booming edtech sector has struggled since pandemic-era lockdowns eased, as students returned to classrooms and demand for online test prep and learning platforms cooled. Companies including Unacademy, which expanded aggressively during the pandemic, have since cut costs, scaled back offline ambitions, and refocused on core digital products.

In a separate post, upGrad co-founder Ronnie Screwvala said Munjal will continue leading Unacademy after the acquisition, adding that the combination would strengthen upGrad’s integrated model spanning K-12 education, upskilling, and lifelong learning. The companies have agreed to an undisclosed break fee if the deal does not close, Screwvala said.

“Unacademy helped invent the modern edtech playbook,” Munjal wrote. “Along the way we lost some focus and market share, and the sector itself has not seen enough real product innovation in recent years.”

Founded in 2015, Unacademy emerged as one of India’s most prominent edtech startups during the pandemic, when lockdowns drove millions of students to online learning platforms. But as demand cooled after classrooms reopened, the company reduced costs, laid off employees, and restructured parts of its business.

Munjal said Unacademy currently holds more than $100 million in cash reserves after spending the past year consolidating company-operated offline centers with franchise partners and refocusing on its core online learning products. The company also completed an employee stock buyback worth ₹500 million (about $5.40 million), with roughly 40% of former employees participating, he said.

Unacademy has raised about $854.3 million across 13 funding rounds, according to PitchBook, and counts investors including SoftBank, Tiger Global, General Atlantic, and Peak XV Partners among its backers.

The upheaval has reshaped the competitive landscape of India’s edtech sector. Byju’s, once the country’s most valuable startup, has seen its valuation written down to effectively zero and entered insolvency proceedings in September 2024.

Meanwhile, rival Physics Wallah, once seen as an underdog in the sector, has turned profitable and continued expanding. The company made a strong debut in the public markets late last year.

In recent months, Munjal has devoted increasing attention to Airlearn, an AI-first language-learning app that imitates the gamified approach popularized by Duolingo. The shift has created friction with some Unacademy investors, who felt the core edtech business was being left adrift during a difficult phase, people familiar with the matter told TechCrunch.

Still, Munjal said Airlearn is gaining traction in markets including the United States, the United Kingdom, Germany, and Canada, and argued that artificial intelligence could unlock a new wave of innovation in education technology.