What kind of impact did COVID-19 have on your business? How has your overall business plan changed, if at all?
"From a revenue point of view," Charan said, "It wasn't affected much. Revenues have increased". Sri Charan Lakkaraju, founder StuMagz, stated that the education sector is the biggest unorganized sector in India. Every institution has a different structure. In SaaS models, companies often say, "less customization is better". With colleges though, Charan said, there are as many customization requests as there are colleges. Providing such highly customized solutions is difficult, all the more so since the purchasing factor for many colleges is the customization they ask for.
Talking of changes in the industry, Charan said, "Earlier, people were not ready to pay for subscriptions of Zoom or other [software], but now they are". Even so, terminating an institution's subscription in the past due to non-payment was a bold move. "You can't compare enterprise sales to college sales. There might be hundreds of enterprises popping up, but colleges are very few. And we have to pay to keep the system running anyway".
Another thing Charan pointed out was handling the customizability requests and the customer support wings of the business. Institutions with partial digital capabilities didn't want to switch over to completely new systems and pay too much for entire suites of solutions. Instead, institutions wanted cheaper a-la-carte solutions. For example, institutions would ask for digital solutions to be plugged into their existing LMS. With legacy systems often not allowing seamless plug and play, it was really hard for Charan's team to deliver during the work-from-home state in the pandemic. Remote customer requests combined with bandwidth issues and lack of time put their customer support wing under a lot of pressure.
What do we expect from 2021 from an EdTech founder's and an institution's perspectives?
Answering this question, Hemant shares the institutional perspective on the available SaaS opportunities:
Systems of record opportunity: Institutions require varied technologies to manage time table, attendance, fees and more. For companies, it's a game of distribution; whoever knocks more doors can sell more. "There’s hardly any price point play that you can do (here)”, Hemant adds. According to him, out of 40,000 institutions, 75% are looking for systems of record.
Systems of engagement opportunity: According to him, 20-25% (around 8000) of the 40,000 institutions are ready for using a system of engagement. This includes LMS, online student engagement through quizzes, photography, etc. Most institutions focus on building an emotional connection, especially, with first-year students given that they aren’t physically present. They’re now ready to take up the newest EdTech solutions to build a system of engagement.
System of intelligence opportunity: As of now, a lot premium and some small institutions, are asking, “how to do resource utilization?”. They want to know at what point should they invest more in facilities, which department is under or over staffed; basically, how to optimize all processes. According to him, about 5% of institutions expect such analytical solutions, 75% of institutions are looking for solutions to manage basics and transactions, and around 20% are looking for engagement between stakeholders.
Sharing his EdTech player perspective, Hemant looks at the market as any other SaaS market. “There’s an enterprise play and an SMB play”, he says. Enterprise play is about inbound sales, which is the aforementioned 20% market where institutions organically reach out to companies. SMB play comes with tier-2 and tier-3 institutions, which has more institutions but lower per-institution revenue. SMB is a long-term play where companies should have a freemium approach to build limited versions to enable maximum participation. “There are lots of opportunities for integrations, up-selling etc. This is where you would need investor capital because you will be burning some capital for the first few years before you start making money.”
Hemant further explains why enterprises in India are not a hot segment. He states that investors invest mostly outside India because most of the fortune 1000 are outside India. However, investors are opening up to the Indian scenario now.
How difficult is it to differentiate the offerings in a saturating market? How did you manage?
Mr Charan from StuMagz says that in Tier II and Tier III cities in India, the system of records never really worked because making payments wasn’t important for them; it was a good-to-have rather than a necessity. Systems of engagement have been their strength. “We were banking on that more and trying to bring more collaboration in that area,” Charan said, “when we understood the system of intelligence, we found it to be a tiny market in India”.
Charan found that many colleges didn’t have GST numbers which meant they didn’t pay the GST. “It might sound minuscule, but at the end of the year – with low margins on the product – you need a lot of investor capital to sustain this kind of a thing because we have to absorb the cost (that colleges aren’t paying).”
Regardless, Charan said that system of engagement has lots of potential because there are more users to interact with. “After we started working with different companies and engaging people in job and work-from-home opportunities, many companies hired interns from us,” Charan said, “that became a good revenue stream for us in the last 4-5 months”. Since this had happened during the admission season, it was a good time for colleges to realize that a platform like Charan’s, is actually helpful in catapulting their image as a good institution.