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Bengaluru: Despite the series of bad decisions and overexuberance which put edtech startup pioneer Byju’s into a bankruptcy process, the sector still remains vibrant, according to experts.
The edtech sector is seeing changes such as consolidation across the market due to acquisitions and some shutdowns, and more focus on incorporating artificial intelligence, especially generative AI. The impact of the boom years of the pandemic, when students and entrance exam aspirants were forced to study from home, has all but petered out.
Analysts and investors told DH they expect the bigger edtechs to emerge strong and continue growing, evolving with the changing market.
“In the market scenario, whatever skill sets are in demand, we cannot actually change them directly in our regular curricula and three-four year programmes. But these kinds of startups can provide certifications of a few hours or weeks where they can directly incorporate those trends that are actually booming in the market,” said Prateek Agrawal, Professor and Associate Dean, School of Computer Science and Engineering, Lovely Professional University (LPU).
Edtech funding from venture capital firms (VCs) went down from $4.1 billion in 2021 to $218 million in 2023, as per data by Venture Intelligence. This year has seen a slight increase since 2023 with $276 million invested so far.
Recently, PhysicsWallah raised $200 million in September, while in October, Eruditus raised $150 million and upGrad raised $60 million. These indicate the market is rebounding.
According to Tracxn, there are 11,000 active startups in the Indian edtech space, accounting for 20% of the global edtech companies.
Space to complement conventional education
Edtechs by and large do not see their post-pandemic role as replacing conventional education, but rather supplementing it.
Edtechs can tap into the market beyond conventional education that focuses on upskilling and vocational training, according to experts, who see one of the main benefits of edtechs as personalised and self-paced learning with the help of technology.
“Giving education to people who want to upskill to get high-quality jobs or high-quality skill sets is by itself a growth story for the next 10 years,” said SuryaNarayanan PaneerSelvam, co-founder, Skill-Lync, an edtech company catering to engineering domains.
“The government, with its New Education Policy (NEP) 2020, is driving towards what a lot of education companies want to do also: more towards skilling rather than degree. The government essentially with its National Skill Development Council (NSDC) and a lot of associated councils is enabling a lot of education companies to cater to more people,” he said.
Mayank Kumar, co-founder at upGrad, said, “As UpGrad, we are doing a lot of work with NSDC to provide those skilling programs and then accruing credits for those which can later be used.” upGrad recently launched their Intern-Zip programme aligned with the central government’s new internship scheme.
Sanjay Swamy, managing partner at Prime Venture Partners, said, “We are and have always been very bullish in the segment.” Prime has invested in a mix of global and Indian companies based in India, totalling five edtechs so far.
He added, “It’s almost more attractive for small-town people. I think the fact of the matter across the board is we have a massive skill shortage in this country.”
But still, not all edtechs are able to tap the rural market.
“In extreme rural areas, edtech reach is still some distance away due to unaffordability and reach of digital coverage. And even the edtech companies tend to market more where there’s large density. In fact, the cost of acquisition and building awareness may be too high in rural areas. And language also plays a part. So while that may be the next step, right now, the focus seems to be on urban areas,” said Kamlesh Vyas, Partner at Deloitte.
Anil Joshi, founder and Managing Partner at Unicorn India Ventures said, “Edtech offers the advantage of low cost in terms of infrastructure, but the fact of life is that an offline education system is much needed for the development of students. I think there is no room for just bombarding kids with so much content.” Unicorn India has invested in one edtech, ForeignAdmits, and is open to funding more.
“The largest challenge for these online companies is to create meaningful content. Right now, you see that current edtechs will flourish but new edtechs might have to innovate more in order to be able to crack this.” said Rajiv Mehta, General Partner at Athera.