Indian EdTech has seen a rapid rise in funding & revenues, as well as in the number of players, business models, and users.
Although the concept of e-learning is not new, COVID-19 has proven to be a catalyst in its growth. Global investments in the sector have been around $18.66 billion in 2019 and the overall market for online education is projected to reach $350 billion by 2025. Whether it is school curriculum, language apps, virtual tutoring, skill training and development, video conferencing tools, or online learning software, COVID-19 has forced a lot of players into the EdTech space.
Consequently, many existing players have witnessed massive growth in usage and revenue, and have seen novel business models emerging in the space.
But, do you know which EdTech business models attract investors, achieve growth, go on to become successful or continue to get traction, and which are the emerging ones?
The recent webinar on “Deep Dive into Successful & Emerging Business Models in EdTech” discussed the above in length. The webinar was hosted by EdTechReview in association with AWS EdStart, moderated by Utkarsh Lokesh (CEO & Editor, EdTechReview) and joined by experts Sandeep Aneja (Founder & Managing Partner, Kaizenvest), Akshay Chaturvedi (Founder & CEO, Leverage Edu), Sam Harris (EdTech Program Lead – Asia Pacific & Japan, AWS), and Beas Dev Ralhan (Co-founder & CEO, Next Education India).
In the webinar, the speakers discussed a range of issues: the kinds of business models that excite investors, the impact of the pandemic on different models, ways to differentiate products for companies with similar business models, channels to acquire customers, emerging business models and opportunities available to them, and lots more. They also gave insights on ways to explore the market for emerging EdTech start-ups, what business models to leverage, and advice on scaling and monetization among others.
What kinds of EdTech business models excite investors to make a bet?
Kaizenvest’s Sandeep Aneja says they are excited about disruptive technologies which bring mass access & quality. He shares three forms of business models that excite them. First, companies which solve the problem of providing access to the masses, also replacing the need for brick and mortar learning by providing information and knowledge on the go. Second, companies which solve the problem of quality for everyone. And thirdly, companies which provide personalized learning.
They also prefer companies which use logic-based thinking learning to solve the access problems for learners at home, and companies that provide access to fragmented learning in a neighbourhood with no quality teachers. Sandeep adds that the factors for their interest in a company vary from country to country, and segment to segment within those countries.
How the recent market situation affects different business models and what adjustments businesses had to make?
Strictly from Leverage Edu’s business point of view, Akshay Chaturvedi shares the COVID-19 crisis being helpful for businesses like theirs. He explains it through the two lenses of stakeholders they closely work with – students and universities. On the student side, going completely online has helped them be ahead of their competitors with only brick and mortar approach. The online approach has helped them add to their revenues amidst the lockdowns.
On the university side, while Akshay maintains that universities are going through tough times, he says that institutions understand what’s happening and are ready to realize the need to build links to employability, reduce fees, and to innovate and build internship options. Akshay adds that universities realized that they would need to work with online players if they want to make students discover their universities. To facilitate this, he says, Leverage Edu had launched a platform called ‘Uni Connect’ right when COVID-19 had struck. The platform allows universities and students to connect, and allows students to apply to any university with one click.
Beas, who operates a B2B model, shares that his company had to start focusing towards cash-generating businesses to survive through the crisis. Like many other companies, he says, they had to cut down on costs, teams, and everything else for sustenance.
Community Opinion (Poll Data)
What kind of business models emerged in India and Asia in the last few months?
Sam Harris of AWS shares that some of the trends he has seen accelerating in the last six months have been on how to provide a real immersive learning experience to students through an EdTech platform, and EdTech capabilities that aren’t available in traditional education environments particularly in some provinces in Indonesia, Vietnam or Philippines. Immersive experiences that they have seen are mostly in the form of gamification. Similar to gamification, Sam says, waves around social engagement have been important in the last 6 to 9 months.
Business models in the Indian EdTech ecosystem that other geographies can learn from or vice versa
Sandeep says the one thing that the rest of the world, the US in particular, can learn from India is the high-quality B2C learning, and effective one-to-one or one-to-several learning happening online. He says that there have been numerous worldwide experiments but none have worked like they have in India. Sandeep maintains that this is a big deal precisely because it is not happening elsewhere. He cautions companies which are doing very good to not take it for granted.
At the same time, Sandeep says that we have got things to learn from other markets, from companies like Teacherspayteachers.com. He really likes the model but says there’s a significant challenge in the EdTech world and they haven’t yet invested enough in arming the teachers with the right kind of training. Emphasizing that not everybody can teach, Sandeep says EdTech companies haven’t done enough to train and develop teachers.
How to differentiate and guard your user base, and the value props when there are a lot of players with similar business models in the market?
Akshay from Leverage Edu says that value proposition and differentiation is built within by using the best possible technology to streamline the experience for the students. Leverage Edu also uses in-house built tech. Apart from using the best technology and building great products, building the right relationship in the ecosystem is very important according to Akshay; it’s the latter that has helped them scale faster over the last few years.
On the B2B perspective, Beas points to the existence of numerous players who provide similar products for school needs. However, he also emphasizes the importance of a proper strategy in providing a good learning solution to schools. He points to the admission and training solutions being offered to the schools on daily basis. Schools are offered a scattered system whereas they expect a comprehensive solution. Beas also mentions an absence of startups in the B2B space.
Challenges for emerging EdTech start-ups and business models and how they can explore the opportunities
Sam from AWS points towards the crowding EdTech market due to the rapid digitization of education customers – students, parents, schools, universities, and ministries. It makes digital education companies focus on all functionalities. As one grows their business, he adds, the functionality requirements of the customers will continue to grow and take a more strategic shape.
On what AWS can do to support emerging start-ups around the region, Sam says AWS EdStart can be a part of the product and technology roadmap discussion be it from a security perspective, machine learning perspective, personalized learning perspective, or all the way through to ensuring scalability and elasticity. Reiterating that they want to be part of that conversation, he says that through the AWS EdStart program they connect EdTechs with their solution architects and technical program managers to drive that discussion and walk through together.
Answering a question from the audience on what the biggest challenge while selling academic products to school is, Beas says it’s the resistance towards institutional and administrative changes. Schools don’t want to change. He says it’s easier to convince the parents to invest the money than it is to convince a school; another reason why more people are in the B2C space.
Emerging business models during the pandemic and EdTech opportunities
Asked if there’s room for new business models in EdTech, and if he has seen newer business models emerging during the last few months, Sandeep says there’s definitely room for new business models. According to him, there are lots of meaningful opportunities: learning through one-on-one or one-to-many session, teaching new subjects which are very hard to teach, providing vernacular and bite-sized learning to parts of society which can’t normally afford expensive education, peer-to-peer learning, professional skills learning, besides a bunch of others.
Sandeep believes that we are just starting to see innovation. B2B technology-led innovation, an area which has been left behind a little, is going to pick up again. A lot of things have occurred which will cause B2B companies to be more powerful again and the space is going to get more competitive in the future. On opportunities in the pre-school space, Sandeep says while the question is timely, it’s controversial. But for young learners, it’s more about being active and keeping the thinking process alive.
Sandeep says the B2B2C is an interesting model. According to him, the easiest and cheapest way for EdTech platforms to acquire students (customers) is to go through the school system because the school system has earned the trust of the learners and their parents for decades. The marginal cost of acquisition for a school is limited, but for an EdTech company it is significantly higher.
While Beas maintains that the real unicorns of EdTech are all B2B2C businesses, schools – he says – are very sceptical and don’t want to be seen only as online market players. In K12, Beas believes, there’s a huge scope for B2B2C. But it will be relationship-driven, where schools will have to trust the company and the company has to be seen by the parents for the products and value they offer.
Community Opinion (Poll Data)
At what stage of your start-up should you seek investors or funding?
Answering an audience’s question from an investor’s perspectives, Sandeep says VCs or investors are looking to see how strongly start-ups believe in their solution and how their solution is different from others. They want to see a solution’s differentiation helping them break into an existing market. However, he maintains that every investor has a unique stage focus. Some like early-stage companies, others like growth stage companies.
Akshay, from a founder’s perspective, says there’s no specific answer to it. While he acknowledges that venture capital or angel investing has grown like crazy over the last couple of years and many people have made money from start-ups in the last 5 to 7 years, he thinks a more relevant question is ‘Do I (as a founder) want to take capital to dilute myself?’. As a means of advice, the Leverage Edu CEO asks fellow start-up founders – especially emerging ones – to take it slow and continue to build. He asks them to focus on the consumers and to build the best product in the market.
Answering a community question on the best channel to acquire schools as customers – virtual or on-ground sales – Beas says he sees online channels to be the most significant in the B2B business. He opines that if anybody should start a company today, it should be online first, and with time include offline operations to increase conversion.
Panelists’ views on scaling first vs monetizing first
Sam says that one of the things he has directly and intimately seen in the last 6 to 9 months are the pitfalls of choosing scale over monetization. However, he cautions that while scaling, as a result of massive one-time demand from a customer, may sound appealing to founders, it is a great risk without a monetization model. From an investors’ point of view, he says, different investors focus on different wide-proposition businesses.
While admitting scaling vs. monetizing as an age-old debate, Sandeep opined that the stakes have changed with time. He thinks it is entirely dependent on the perception and the belief of the founder. However, Sandeep says that if you firmly believe that you are out to change the world and create a network that will change the dialogue, you can make your customers pay for your efforts five years down the line. He says that one has to believe in saying ‘I’m solving a problem by creating a whole new level of thinking in networking; I’m changing the game.’ When you are game-changing, he says, you don’t have to worry about getting paid for it. You have to worry about making sure everybody believes in that new game. Then you can worry about the business model.
However, Sandeep advises that if you are entering a competitive & already occupied domain with a significant opportunity to grab the market share – provided you are playing the market share game – then you have to monetize quickly and show that you have the most efficient business model. Only then can you grab attention and grow.
Community Opinion (Poll Data)
When asked what changes he thinks are required to cater to different markets in India, Akshay voiced the incomparable value of the insights gotten by directly speaking to the on-ground users. He says that there have to be enough proof points created in the immediate surroundings for users to choose from. Lastly, he says that one needs to build credibility in one’s local surrounding as well.
Watch the webinar recording & listen to the detailed discussion on the topic: “Deep Dive into Successful & Emerging Business Models in EdTech”.
Also, you would like to learn how AWS EdStart program can support your EdTech business, please visit here.
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