‘Entire teams gone overnight’: LingoAce laid off hundreds amid expansion hurdles

LingoAce, the edtech company backed by Peak XV Partners (formerly Sequoia Capital India) that once flirted with the unicorn status, has axed hundreds of employees in China, the US, Singapore, Indonesia, and Thailand in about half a dozen rounds of layoffs in the past year, multiple sources familiar with the startup tell Tech in Asia.

As the firm increasingly looked toward developed markets like the US and Europe, it has also relocated some of its operations to less expensive bases like Wuhan and Malaysia.

Large-scale layoffs in July and November 2022 as well as in January and April this year saw entire departments being let go, while smaller rounds of cuts also occurred periodically starting around the first half of last year.

The cuts affected departments across HR, finance, marketing, sales and curriculum, as well as product and engineering. Often, they came without forewarning, current and former LingoAce employees tell us. The sources in the story asked not to be identified.

As the fundraising environment worsened, the firm could not give an update on its efforts to raise US$200 million, which was reported in October last year.

Efforts to develop new subjects and expand its customer pool have also underperformed, multiple sources familiar with the company say. According to audited financials, the startup reported widening losses and failed to achieve gross profitability in 2022.

In an emailed statement to Tech in Asia, LingoAce founder and CEO Hugh Yao confirms that the company has been “streamlining” its global operations since 2022 to ensure “efficiency and financial sustainability” after a period of expansion of its regional offices that created “many redundancies.”

In the past year, “economic shifts and changes in business needs” have led to a reorganization of the business by product business units (Chinese, English, math, and music) instead of regional business units. This meant a centralizing of its marketing and sales functions, the CEO explains.

Founded in 2017, LingoAce offers online classes for children between the ages of three and 15. Headquartered in Singapore, it also has offices in Indonesia, Thailand, China, the US, and Spain.

The firm’s flagship offering is a Chinese-language learning product delivered via interactive livestreamed classes. A majority of the educators who lead these sessions are based in China, sources say.

LingoAce was part of a wave of edtech startups that rose in prominence during the pandemic as schools shut and learning moved online. In 2021, the firm raised US$105 million in a series C round led by Peak XV Partners, one of the largest rounds raised by an edtech player in Southeast Asia that year.

The numerous layoffs mark a dramatic U-turn for the company from the past two years, when it expanded its course offerings beyond languages and acquired new customer segments.

It hired aggressively during the pandemic. In 2020, fresh off a US$6 million fundraise, the firm said it planned to hire over 500 employees in Indonesia alone.

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