Indian EdTech has seen a rapid rise in terms of number of players, users, and funding. India’s EdTech sector is worth $2.5 Bn now and is expected to grow ~4x by 2025 to over $10Bn.
The COVID-19 pandemic has accelerated this trend. In fact, the crisis has been a watershed moment for India’s EdTech sector, which has raised over $1.2B of funding in 2020 till date.
Not just in terms of investments, according to a report by BARC India and Nielsen, there has been a 30% increase in the time spent on education apps since the lockdown commenced. Also, according to a report by Omidyar Network India and RedSeer, India’s EdTech user base has doubled from 45 million to 90 million, with a massive 83% jump in the paid user base.
But, is all this just a bubble or here to stay? Will the growth trend continue, and if yes, for how long? Which segments will see lightning growth and what sort of companies will attract investors’ interests?
The recent webinar on “Rapid Rise in Indian EdTech Funding – Bubble or Here to Stay?” answered all the above questions. The webinar was hosted by EdTechReview in association with AWS EdStart, moderated by Utkarsh Lokesh (CEO & Editor, EdTechReview) and joined by experts like Sarvesh Kanodia (Principal Investments, Omidyar Network India), Zishaan Hayath (Founder & CEO, Toppr), Sunil PP (Head for Education & Nonprofit, AISPL, and Dhawal Parate (Co-founder, CodingNinjas).
The speakers discussed the current state, challenges, and opportunities in the Indian EdTech industry, covered emerging players and businesses, discussed what’s here to stay, shared insights on the trends, where the Indian EdTech is headed, and much more.
Which EdTech segments are attracting investors?
Sarvesh Kanodia of Omidyar says that opportunities are emerging in the field of life skills; academics are not the only focus anymore. The B2C K12-EdTech space has seen innovations and investment, but early-learning is yet untapped, as are B2B and B2B2C in the segment. This is due to the lack of technology adoption from institutions. Now that institutions have been forced to adopt new technology post the pandemic, Sarvesh predicts that there is likely going to be a lot more investment in B2B with the potential for creating large B2B companies.
For post-K12, Sarvesh has seen high quality alternate programs which are creating a lively investment space. He also expects the EdTech funding-challenge to be solved given the mounting investor interest, even from previously uninterested parties. And that change is just the tip of the iceberg.
How is the market situation and geographic penetration? How did companies adapt to changes in recent times?
Toppr saw marginal revenue increase since the COVID-19 outbreak, but exponential increase in the number of users, according to Zishaan Hayath. Toppr currently has 30 million monthly active users in 2020 in comparison to a mere 4 million monthly users in 2019. This massive increase, although helped by the pandemic, Zishaan attributes to the growing Indian internet market and trends.
Toppr’s reach is ‘deeper’ than ever. Zishaan says that 60% of their users were from metro cities and 40% of those were from Tier 2 cities until last year. As of the day of the webinar, Tier 1 city traffic on their platform is less than 30%, while Tier 3 city traffic is more than 45%.
Community Opinion (Poll Data)
Omidyar mentioned how India has 85% of users from Tier 2 cities and beyond, providing a great opportunity for EdTech entrepreneurs. Sarvesh also mentioned the inadequate quality of offline solutions especially in Tier 2 cities and beyond. The Next Half Billion, according to Sarvesh, are users who are coming online for the first time. These are users who have bought a phone for the first-time during lockdown and want to continue the free online education they found. For these new users, engagement needs to be designed differently, especially when it comes to the school-age segment; he believes assisted learning, instant doubt resolution, and student communities are the key elements.
EdTech companies need to bring learner communities online; communities that the learner feels comfortable learning with, be it friends, family, or peers. There’s a dire need to focus on all the aspects of providing students with a comprehensive system of learning.
Coding Ninjas reported rising revenues. Though, Dhawal Parate added that COVID-19’s complete positive impact is yet to be seen in the college market. Much like the rest of the world, Coding Ninjas’ future plans were preponed due to the COVID-19 digital-adoption acceleration. Coding Ninjas tracks students’ geography according to the locality of colleges. But since students have left for their homes, their penetration in Tier 3 cities has increased, although the largest uptake is still from Tier 1 and Tier 2 city colleges.
Sunil P P from AISPL was extremely positive that it took only 8 months to achieve digitalization when the world had been striving for it for 20 years. According to him, the successful digitalization is evident from sector-wide rise in the number of users (K12, HigherEd, Govt., Skilling/Reskilling). Whether money follows the same trail is to be seen.
They were approached by the Delhi Govt. to come up with solutions for the benefit of public schools in Delhi. AWS customer Career Launcher stepped in and created a complete online learning module and helped 900 schools and 1.9 lakh children go online for education through project aspiration. Earlier in March, they also saw a million student users in eight weeks on their live-class platform which they had started in collaboration with their Bengaluru EdTech partner. They also trained 54000 teachers, most of which were first time users of virtual classes. Similar scenarios in Tier 2 and 3 cities are driving the EdTech sector growth and learning.
Challenges and roadblocks facing EdTech startups
Sarvesh talked of the struggles of the 1st month of lockdown for the majority of EdTech startups. ‘No physical movement' was an unprecedented challenge, but things stabilized by June. Since then, it has been about what new ideas they can come up with to tackle the explosion of usage – both in terms of number of users and per-user engagement.
Another challenge Sarvesh talked about was that of instructional language(s). With 80-85% users learning in vernacular, every solution needs to be multilingual. Their portfolio company Doubtnut has a large part of its search in vernacular. The focus, he says, is on starting learning with English and gradually covering vernacular content.
Another challenging aspect for every EdTech company is earning the trust of users to convince them to pay. Sarvesh suggested making users understand products by giving them 7-14 days trials or by making products affordable. Achieving affordability by offering bite-sized content, and subscription-based content opens the market (and the product) to a large number of users.
Dhawal said that their career boot camp – Career Camp – took a hard hit due to the decline in both supply and demand sides across the job market. They had to halt their scaling. Also, their newer product, Ninjas Jr., being late to the K12 market meant they had to deal with harsh competition. By the time they launched their product, user-acquisitions costs in India had tripled. Dhawal is still certain about the scalability and profitability in the current scenario, but warns that managing the large number of teachers will be tough.
Sunil emphasized the twin problem of monetization and retention. He reiterated the doubt whether the money will follow the user and usage trends and how much of it can be converted. Since users are already aboard platforms, retention is a problem due to the sheer variety that users have. Why a customer stays on any platform is going to be the defining trait of a company. Creativity of the entire EdTech segment will be put to the test. Personalization of learning outcomes and learning processes will get pushed harder, and that is going to convert. Adapting to the ongoing and oncoming changes, especially considering the National Education Policy, is imperative. A monumental task given India’s lead in the growing EdTech user base, but Sunil holds a positive outlook on India emerging as a leader.
View on National Education Policy’s Impact on EdTech
Zishaan says that the NEP will have no immediate impact except the adaptation to the structural changes. The rate of change in firms is higher than what the NEP mandates. It's mostly problematic for schools to adapt to the change than it is for organizations. Why? Because change is intrinsic to tech companies according to Zishaan. It’s something they chase after.
Sarvesh talks of NEP’s focus on life skills and early learning. It opens opportunities for EdTech companies to make solutions around new, more valuable parameters. While some see hurdles in the NEP, Sarvesh sees innovation opportunities for EdTech companies.
How Experts See the Future of Indian EdTech
Attributing every aspect of growth to the pandemic is an injustice to the EdTech sector. Sunil has seen lots of EdTech companies doing well even before. The pandemic has given the EdTech sector a chance to showcase its creativity and capacity. The last 8 months have showcased companies scaling from 3 to 30 million users. That’s been possible because of good products. Sunil reckons that B2B and B2B2B sections of the industry will grow because institutions have had a taste of technology in the last few months and they will not be willing to give up any of it. Given the current situation, success is available for anyone willing to invest their time in the sector.
Sarvesh equates quality with success. With 260 million students in the K12 space, there’s room for experimental products still. But why parents and students will stick to a product only if they see the product creating value for their future. It’s like how test prep companies and tuition centers advertise their toppers. EdTech needs to come up with a similar, measurable metric. The biggest differentiator for companies is going to be how they produce learning outcomes, demonstrate them, and effectively communicate them as a part of their branding. That, coupled with an outcome driven skilling model is going to be the key to success.
Sarvesh added that Omidyar’s future investments focus will be on K12, B2B, life skills, and early learning. Education financing for schools and students will also gain prominence.
Community Opinion (Poll Data)
Dhawal talks of the need to standardize colleges as providers and platforms that teach and provide content but also emphasizes the need to track success, and leveraging technologies. This will create opportunities for many B2B and B2C EdTech players. Also, the pandemic transcends geographies, so in case of certain businesses like CodingNinjas in the coding space, the market dynamic and much of what is true for India might be true for another country/region. The Indian and international markets, Dhawal adds, are large enough in terms of dollar-revenue for opportunities.
Zishaan talks of funding being currently concentrated in K12 with no shot on what the void spaces for new funding are. He appreciated the good that forced-training has done. Students and teachers of all ages have been using digital tools like Google Meet and Zoom enabling classes to happen online even for younger kids. With the adoption barrier removed, he believes that the classes that would have happened in person can definitely happen online providing the potential for new emergences like music classes happening in live class modules. He also believes that going forward, schools are going to be more accountable for what they charge since a lot of parents have already seen and will continue to see what is being done and taught at school via video conferencing. Schools will have to deliver the value they charge for.
Sunil reinforced the positives of the inevitable technology adoption. It is going to make students comfortable with self-learning, which has not been much present in India. Till now, students have been using free platforms like AWS Educate for a week or two, then dropping off. That no longer will be the scenario. Amplified self-learning is going to help the community a lot. There will also be a massive surge in the B2B and B2B2C space. That’s where the money will come in. Sunil recounts that companies have sold multiple products in a month now, where they took 1+ years to sell the same amount earlier. The Govt’s disruptive push in the form of NEP (like coding in 6th grade, & vocational training) will help a lot with this.
Little interventions like these and the development of the EdTech ecosystem are going to help the community grow.
Watch the webinar recording & listen to the detailed discussion on the “Rapid Rise in Indian EdTech Funding – Bubble or Here to Stay?”.
Written by: Stephen Soulunii
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