Cash-strapped edtech startup Lido Learning files for bankruptcy

The company’s board passed a resolution to file an application under Section 10 of the Insolvency and Bankruptcy Code during an extraordinary general meeting held on September 5, filings with the Ministry of Corporate Affairs (MCA) showed.

“Resolved that pursuant to Section 10 of the Insolvency & Bankruptcy Code, 2016, considering the facts that the company is unable to pay its debts which are due and there are defaults made by the company, the consent of the shareholders be and is hereby accorded to file an application/petition – initiation of Corporate Insolvency Resolution Process by corporate applicant, be filed before the National Company Law Tribunal, Mumbai Bench so as to resolve its debts,” according to the regulatory filings.

News website Entrackr was the first to report the development.

Lido was in active discussions for a potential buyout by Reliance Industries, The Morning Context had reported in June. However, the talks did not fructify, according to a person aware of the discussion.

Responding to ET’s queries on any potential acquisition of Lido Learning, a spokesperson for Reliance Industries said: “We would like to point out that the information that you have is not true. We deny having any interest in the company.”

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Lido Learning founder Sahil Sheth did not respond to ET’s text messages and emails till press time Thursday.

Founded in 2019, Lido Learning offers live online tuition classes to children from kindergarten (KG) to Grade 9 across mathematics, science, English, and coding.

It caters to the Indian and Middle East markets.

In September last year,
the company said it had raised $10 million (about Rs 73.4 crore) from Ronnie Screwvala’s Unilazer Ventures, taking its overall funding to $20 million.

Other backers include Bace Ventures, Picus Capital, 9Unicorns, Paytm founder Vijay Shekhar Sharma, Myntra and Cultfit founder Mukesh Bansal, People Group’s Anupam Mittal, and Mensa Brands founder Ananth Narayanan.

Merger hopes, teachers upset

The company fired close to 200 employees in February amid a cash-crunch. It has yet to pay January salaries of several employees that it had laid off, according to media reports.

According to a cross-section of teachers, some teachers at higher grades were retained and put on a two-week term break from the last week of August. An educator on the platform told ET that teachers have not been paid salaries for the last two months. Further, some teachers who were asked to quit and not paid salaries, are contemplating legal action.

Another educator said the management at Lido had sent them a message hinting at potential merger talks.

“As we all know, mergers take time and can be testing. The leadership team is in constant communication and is making every effort to clarify and put things right,” according to a part of the message from Lido’s top management to this educator.

Slowdown in Edtech

As global headwinds continue to dampen the overall funding sentiment, several ed-tech firms have shifted to cash-conservation efforts in a bid to increase their cash runway.

Edtech startups have been facing the brunt of the funding slowdown and bigger players including Vedantu and Unacademy have resorted to mass layoffs.

Last month,
Vedantu laid off another 100 employees after sacking 624 full time and contractual employees in May.

Vedantu cofounder Vamsi Krishna had blamed global macro-headwinds and impending recession fears as major reasons for the layoffs.

Unacademy cofounder Gaurav Munjal
warned employees of the ‘funding winter’ in May. This came after the Unacademy Group fired 1,000 contractual and full-time employees across its core business and group companies, ET reported on April 7.

The tough macro environment has also led to
edtech firms like Udayy closing the shutters on their business.