Lido tells employees to leave as it winds up ops

Quality Tutorials Pvt. Ltd., which runs the edtech platform for students of classes V-XII, sought resignation earlier this month as it is looking to shut down operations amid lack of funding, said the people cited above.

Three employees said Lido Learning founder Sahil Sheth told a town hall meeting on February 5 that the company was facing financial crunch and would not be able to pay salaries for February.

Sheth said the employees may get their salaries in the next three months and the company plans to sell their assets to generate cash to pay the dues, the three employees said on condition of anonymity.

Sheth said the company will not be able to continue as an ongoing concern, and thus is winding up its operations, he said. All its over 1,200 employees were asked to resign. The company did not issue any termination letter.

Ronnie Screwvala, whose Uniledger Ventures recently invested $10 million in Lido Learning, said he heard the company was considering mergers and acquisitions just three weeks ago.

“(I) am therefore shocked to hear this,” Screwvala said, adding that as an investor, he has “zero oversight over the company” and was never on the board of Lido Learning.

“Unfortunately, the founders gave very little information about the situation and the reality to all investors. The important thing is that parents and students should not be harmed at all, and to that end, I understand that there are other K-12 (kindergarten to twelfth grade) edtech companies looking to adopt and adopt students. What happened is unacceptable,” said Screwvala.

To be sure, Lido Learning’s website is still live, and the company is still accepting calls. But the people cited above said it’s as good as off. Emails and messages sent to Lido Learning and Sheth remained unanswered at press time.

Founded in April 2019, Lido Learning operates a platform that sets up online tutoring. Apart from Screwvala, it counts Anupam Mittal and Vijay Shekhar Sharma among its supporters. The company has raised over $20 million to date. In September, Lido Learning said it was on track to reach a run rate of $100 million by the end of the current fiscal year.

Screwvala has made several investments in edtech firms in his individual capacity and through Unilazer Ventures Pvt Ltd. Ltd, a private investment company he founded in 1991. Screwvala co-founded UpGrad Education Pvt. Ltd.

Alibaba Backed BACE Ventures; Pickus Capital; 9 unicorns; Paytm Chief Financial Officer Madhur Deora; Mukesh Bansal, co-founder of Cure.fit; And Ananth Narayanan, the founder of the Mensa brand, has also invested in Lido Learning.

The failure of Lido Learning comes as the edtech segment in India has seen rapid growth as demand for remote learning and digital learning applications has increased following the pandemic-induced lockdown. Investors have poured millions of dollars into edtech firms.

India has minted six unicorn-valuation startups worth over $1 billion in the edtech space, but most of them still haven’t turned profitable due to high customer acquisition costs, including marketing and promotional activities. However, Lido Learning was trying to reduce these costs, said Rishabh Kumar, assistant marketing manager at Lido Learning.

Kumar said the company is cutting its ‘fee per customer’, which is paid to marketing staff who get customers or leads. Kumar claims that he used to get 65 per lead, but it was reduced to a minimum 12 February. “I had a feeling that all was not well with the company as we were seeing our fees per lead coming down drastically. But I didn’t expect anything like this to happen all of a sudden. Sahil sir said in the morning (February 5th) ) said ‘I don’t want to ruin your day, so that’s what I do first thing in the morning’, and thus we were told the company was closing and we won’t get paid,’ Kumar said said.

The three employees mentioned above said that the company is still accepting payments from some customers. The mother of a Class VI student, on the condition of anonymity, said: “We had taken an external financing option from Bajaj Finance to pay the subscription fee, and we asked them several times before the news of the company’s closure became public. Emails were sent. We did not find the courses so useful. The amount is still debited every month, and there is no clarity.”

Meanwhile, investors are blaming Lido Learning’s management for the collapse. An investor on Lido Learning’s cap-table, who declined to be named, said the company’s leadership could have handled the situation better. The investor, speaking on condition of anonymity, said, “The warning signs were quite obvious, but not enough attention. Investors backed the company through several rounds and sought to salvage the situation, including helping raise an external round.” Tried my best.” Well, when no one was ready,” said the investor.

The investor also discussed selling the business to a colleague without giving details. “Something could have been done if it had been a better time,” said the person.

“Unfortunately, some founders prefer to kill the child rather than allow someone else to raise it.”