The Austrian edtech unicorn Gostudent wants to shrink itself. With a significantly reduced workforce, a profit should be possible in 2024.
It is the latest in a long series of bad news for the Austrian unicorn: the learning platform Gostudent is once again laying off a large number of employees. The workforce was informed on Tuesday, as Gründerszene learned from several sources.
A little later, the two founders Felix Ohswald and Gregor Müller announced on Linkedin that they wanted to reorganize their company: “However, we will pursue a more organic growth strategy and reassess the size of our market teams.” They did not provide any specific information about the extent of the layoffs Position: “In view of these strategic changes, we also have to rethink our central positioning. Unfortunately, this will also involve an adjustment in the size of our central teams.”
Ohswald and Müller do not give any specific figures in their post, and Gostudent did not initially provide any official details when asked by Gründerszene. Many of the laid-off employees are already looking for new job opportunities on the career network. According to the founders, the aim is to operate more efficiently. Last year the burn rate was reduced by 70 percent. “However, our burn rate is still too high given the difficult market conditions,” they say.
Raised capital a few months ago – also as a loan
The Viennese startup last raised capital in August 2023. 87 million euros (95 million US dollars) flowed into the company in the form of equity and debt capital. With the money, which also comes from Deutsche Bank, Gostudent wants, among other things, to “advance the integration of AI applications,” it said about the financing. The tutoring startup plans to develop a tutor bot that uses artificial intelligence to support tutoring. The AI will be used, among other things, in learning new languages.
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In addition, the capital increase should support the implementation of an online-offline hybrid model. Originally, Gostunde was a purely online learning platform, but in December 2022 the startup bought the offline tutoring provider Studienkreis. In the future, Gostudent wants to offer both online and offline tutoring, which can also be used in combination. “For example, a family that prefers offline tutoring can switch to online one-on-one tutoring during a vacation so that the flow of learning is not interrupted. Or if a child enjoys learning English together with other children, but needs individual support in mathematics, we can easily make this possible,” said co-founder Felix Ohswald in the announcement about the group.
Gostudent was founded in 2016. The official founder story goes like this: Felix Ohswald repeatedly gave his little brother – and later also his friends – math tutoring via WhatsApp. This initially resulted in a Whatsapp service for homework help in 2015, followed a year later by the Gostudent app. Gostudent is now one of the world's leading providers of tutoring and, with a valuation of three billion euros, is the highest valued edtech company in Europe. The company says it employs around 1,500 people.
Gostudent expansion has stalled for years
In the past few months there had already been rumblings at the edtech unicorn. In particular, Gostudent failed to expand into countries outside of German-speaking countries. Already in September 2022, Gostudent's US office, which had opened five months earlier, was closed again. The branch in Sweden suffered the same fate, and Gostudent also closed in Latin America and Canada.
These restructurings were accompanied by waves of layoffs. Just over a year ago, several hundred employees lost their jobs in the first attempt at liberation. At that time, Gostudent frontman Ohswald was sure: the savings plan should work “100 percent,” he said in a meeting with the remaining employees. The goal was to become profitable by the end of 2023 – which the startup apparently failed to achieve.
At the same time, Gostudent changed its growth focus and took over the German competitor Studienkreis. The hopes of the founders – and the expectations of the investors who have bet large sums on the edtech – are now based on this and Gostudent's core business in German-speaking countries. According to Crunchbase, around $800 million has flowed into the company so far.
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Source: https://www.businessinsider.de/gruenderszene/business/gostudent-erneute-entlassungen/
