Unacademy, once one of India’s best-known edtech startups, may now be worth less than $500 million, 85% less than its pandemic-era peak valuation, as the company undergoes a steep reset and explores merger and acquisition options.

In a detailed note posted on X on Wednesday marking the startup’s 10th anniversary, Unacademy’s CEO Gaurav Munjal said the startup’s valuation has fallen sharply from its $3.5 billion peak three years ago to less than $500 million today. He also confirmed the startup is in M&A talks.

India’s edtech landscape has fractured since the pandemic, when the sector saw a rare moment of opportunity during the lockdowns. Startups like Unacademy and Byju’s raised billions, hired freely, and invested heavily in sales and marketing to draw customers, but growth stalled after the lockdowns eased and students went back to offline classes.

Byju’s, India’s most valuable startup just three years ago, has seen its valuation written down to effectively zero, and it entered insolvency proceedings in September last year. In November, a U.S. bankruptcy court ordered its founder Byju Raveendran to pay more than $1.07 billion for ignoring court directives, and providing “evasive, incomplete” responses related to the transfer of $533 million by the startup’s U.S. unit that it never recovered.

Meanwhile, Physics Wallah, long considered the underdog, has turned profitable and continued to expand, and last month had a strong public-market debut.

In his note, Unacademy’s Munjal saw the last three years were marked by shrinking demand, intensifying competition, and internal turmoil as the startup suffered losses and abandoned aggressive expansion plans.

“Personally, for us founders, this was the most difficult three years that we had ever seen in our lives because until 2021, we had not seen a single month of degrowth [sic],” he wrote. “But in the last three years, we saw losing market share in the game that we literally invented and it hurt.”

Munjal believes the slump was driven by a rapid shift in market dynamics after the pandemic. As students moved back to offline classrooms and competitors launched lower-priced offerings modeled on Unacademy’s early strategy, the company saw demand decline and growth stagnate.

“We got complacent,” he wrote, adding that the firm failed to innovate on price even as rivals undercut it.

In recent months, Munjal has devoted increasing attention to AirLearn, his new AI-first language learning app that imitates Duolingo’s gamified approach. That 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.

Founded in 2015, Unacademy has raised about $854.3 million over 13 funding rounds, according to PitchBook, and counts SoftBank, Tiger Global, General Atlantic, and Peak XV Partners among its backers.

Munjal said Unacademy has spent the past two years overhauling its operations, slashing its annual burn from ₹14 billion (around $155.7 million) in 2022 to less than ₹1.75 billion (approximately $19.5 million) this year. The startup has significantly reduced headcount through layoffs, cut marketing costs, and refocused on its core subscription business.

Recent reports have suggested that rival UpGrad has discussed acquiring Unacademy for between $300 and $400 million.