Updated: October 19, 2020 7:21:19 am
Byju raveendran
From school students to working professionals, the pandemic has created a large addressable market for startups in educational technology, or ed-tech, attracting significant interest from private equity and venture capital investors over the past six years. months.
Among the eight rounds of funding of $ 100 million or more in Indian startups during April-September, five involved educational technology companies such as Byju’s, Vedantu, Unacademy and Eruditus. According to data obtained from Venture Intelligence, a third of the $ 1.5 billion raised in these eight investment rounds came from Byju.
Consider this:
* Byju classes raised $ 500 million in two rounds in June and September from investors including Tiger Global, General Atlantic, Silver Lake, DST Global.
* Unacademy raised $ 153 million in September from SoftBank, IIFL VC, Sequoia Capital, General Atlantic, Nexus Venture Partners, and other investors.
* Higher education platform Eruditus raised $ 113 million in August from Naspers, Chan Zuckerberg Initiative, Sequoia Capital, and other investors.
* Remote mentoring startup Vedantu raised $ 100 million in July from Omidyar Network, Tiger Global, Coatue Management and others.
According to India Brand Equity Foundation, with more than 250 million students attending school, there is a huge gap between supply and demand in education sector with an estimated additional requirement of 200,000 schools, 35,000 colleges, 700 universities and 40 million places in vocational training. centers.
However, with the growing penetration of the internet and the push towards online education in the context of Covid, educational technology companies are expected to grow even more. According to data from the Telecommunications Regulatory Authority of India (TRAI), India had 734.19 million Internet users in March 2020. A recent report from Cisco has estimated that India will have more than 900 million users by 2023.
“Two key factors driving investment in the educational technology sector are the availability of technology to educate and the huge mismatch between supply and demand in India. The existing ratio of vacancies to students who are eager to study is not going to accommodate all of them in universities and the only alternative form of mass education is online media and that is gaining ground, ”said Narayanan Ramaswamy, National Leader – Education and Abilities. Development, KPMG in India.
According to those who follow the segment, most of the funds raised by educational technology companies have been used for marketing or inorganic expansion. Last year, Byju’s acquired the US-based Osmo learning platform for $ 120 million as part of its global expansion plan. This was followed by the largest deal in the Indian sector with the acquisition of Byju’s online encryption platform WhiteHatJr for $ 300 million. Byju’s rival Unacademy has also acquired smaller startups such as PrepLadder, Kreatryx, CodeChef and Mastree.
Also, although Unacademy is one of the official IPL partners, Byju’s was said to be in the running for the title sponsorship; From now on, Byju’s sponsors the pre and post game programs.
“Many investors come for profit, but many others come to create impact, that is, to make education more equitable,” said Saiju Aravind, founder of Kochi-based online education platform EduBrisk. , adding that his company has the support of “Investors who want to make education affordable and offer quality education to people in general.”
Ramaswamy said the pandemic has dealt with initial skepticism about how online education will work. He said that even after normality returns, the sector will continue to grow and attract investment, as there is a large mismatch between supply and demand. But according to him, the investment is mainly in technology, not much is happening in infrastructure.
Also in the higher education segment, several macro trends, such as skills redundancy, coupled with high unemployment rates and the gap in deployable skills, along with Covid, have brought a new urgency to the need for continuous learning. .
Consulting firm RedSeer noted that with factors such as loosening regulations governing degrees, the online higher education market is expected to grow to $ 5 billion over the next five years, a tenfold increase from its current size. .
“If you have a good school infrastructure, investing in technology adds some value, but in a country like ours, where there are problems of teacher absenteeism and variable quality, it can lead to a huge leap,” said Naushad Forbes, former president. of the IIC and co-chair of Forbes Marshall.
Of the $ 3.29 billion received by India’s education sector as foreign direct investment (FDI) between April 2000 and June 2020, $ 2.12 billion was raised between June 2015 and June 2020.
The government has also recognized the opportunity. In the 2020-21 budget speech, Finance Minister Nirmala Sitharaman proposed the creation of a “comprehensive grade level online education program.”
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