The pandemic has helped them grow bigger than ever. But will this last?
Byju’s, edtech unicorn and India’s most valuable startup, is on an acquisition spree. Recently, the startup acquired after-school learning app Toppr and upskilling platform Great Learning in a cash and stock deal, showed the regulatory filings filed by the firm. In 2021 alone, Byju’s has bought six startups across India and the U.S. Also, Byju’s, which added 45 million new users in 2020, saw a record monthly revenue of ₹350 crore in April 2020. Not only Byju’s, but other edtech startup are also logging strong growth.
Vedantu, another edtech startup, clocked a revenue growth of 80% between April and May 2020. That revenue growth is the startup’s highest growth in the last 2+ years. Another edtech startup, ConveGenius, has scaled from 500,000 to 10 million users since June 2020, and it aims to reach 40–50 million students by the end of 2021. According to the Indian Private Equity and Venture Capital Association (IVCA), edtech funding jumped from $522 million in 2019 to an all-time high of $2.2 billion in 2020.
The growth makes sense because schools and colleges are closed due to the lockdowns imposed across the action. Until now, there haven’t been any clarity when the pandemic will end, so parents continue to focus on paying money to edtech platforms in order for their children to get the best education possible.
Also, Prime Minister Narendra Modi’s government focus on the new National Education Policy (NEP) and its thrust to online and blended learning gave a boost to edtech companies. The other thing that helped edtech startups grow is the Indian government’s digital initiative to promote e-learning via initiatives such as SWAYAM programme and DIKSHA. The aim of these initiatives is to ensure that academic sessions are not interrupted.
The Dull Past
The above information makes it seem like that the pandemic was the sole reason for the growth of edtech startups. Well, that is the truth. Let’s take a look at some of the old data. According to Datalabs by Inc42, more than 4,450 edtech startups were launched in India between January 2014 and September 2019. Of these 4,450 startups, 25% of them have been shut down while only 4.17% of them raised funds. However, Byju’s attracted 65% of the total funding in edtech startups.
If we dig deep to learn the reason behind their failure, we get some interesting answers. In order for a startup to create a brand name, it needs large funds, but investors focus on investing in those startups, which can generate revenue for them. So, before the pandemic, many parents didn’t want to install an edtech app, because their children were going to school and learning lessons the ‘usual way’. Hence, edtech startups were seen as a sector where you have to sow, sow (i.e. keep on funding), and wait for years to reap any benefits (in this case, generate revenue).
Pranjal Kumar, CFO and head of education fund at Bertelsmann told Inc42 in 2019, “In our view, the failure rate for edtech startups is comparable with any other sector. Given that education is a high-involvement category and a career-affecting service, tech adoption is usually lower compared to other services and products. Hence, edtech startups can take more time to scale up than in some of the other categories.”
The tables have turned now, and they were turned by the pandemic. A report by RedSeer Consulting and Omidyar Network India says online education offerings across grades 1 to 12 are estimated to surge 6.3 times to create a $1.7 billion market, while the Post-K12 market is projected to grow 3.7 times to create a $1.8 billion market by 2022. A report by Kr-ASIA predicts that India’s edtech industry will touch $3.5 billion by 2022. Statista projects the edtech market size to hit $10.4 billion by 2025.
In another report released in April this year by transaction advisory firm RBSA Advisors, India’s edtech sector is expected to become $30 billion in the next 10 years. As per DataLabs analysis, test prep and K-12 edtech startups combined are projected to be worth $1.3 billion by 2021. Another report, called “Augmented and Virtual Reality in Education,” mentioned by Inc42, said that the market for augmented reality in education will touch $5.3 billion in 2023 while the market for virtual reality head-mounted displays estimated at $640 million.
So, What’s Next?
At the end of the day, many say that learning by going to school directly can never be replaced by anything else. So, the question is, will edtech startups continue to grow at an accelerated rate even after the pandemic? Well, some say yes. Tanushree Nagori, co-founder of Doubtnut told Forbes India, “As schools reopen, kids have less time on hand to spend on their devices, so naturally time spent on edtech platforms will fall…” However, a complete drop-off is unlikely because many have made an “investment for the future” by buying digital devices, writes, Forbes India.
But we also have to understand that the edtech space has become highly competitive because more startups are eager to capitalize on the ‘learning from home’ opportunity. As we mentioned earlier, raising funds and generating revenue as an edtech startup are not easy tasks.
Byju’s, the most valuable startup in India, took nearly 10 years to achieve its current $16.5 billion valuation. The other thing that we have to note is that Byju’s was raising money even when other edtech startups were struggling to do so. This means that Byju’s had the first comer advantage. So, in order for other startups to replicate Byju’s success, it might take them years, or even decades.
Anirudh Damani, managing partner of VC firm Artha Venture Fund told KrAsia, as mentioned by Scroll.in, “At the end of the day, there are only so many apps one person can use for education. Eventually, there will be two or three winners in every category, and everyone else will die down.” The market size is huge; the competition is cut-throat and everyone wants a piece of this edtech pie — But the question is, is e-learning actually helping our children for the better? And that’s a whole another story…