With this piece we take a look at the rise of Edtech Industry in India. We take a look at the demand factors, the motivators and the bummers.
5-years ago, no one would have imagined the rapid adoption of digital payments in India at the grassroots level. From roadside vendors to mom-n-pop stores, everyone jumped on the bandwagon of accepting cashless transactions via wallets like Paytm, Freecharge and later on via UPI platforms. What led to be a critical trigger for it was Demonetization in November 2016. It was chaotic and uncomfortable but it proved to be a boon for the FinTech industry.
Something similar is now happening to digital education, mass open online courses (MOOCs), video lectures on collaboration tools like Zoom and blooming Learning Management Software (LMS) space – commonly called EdTech or Education Technology.
There are over 4000 players in the education technology space in India but only a few of these start-ups stand out for their niche specialization. BYJU’s is the poster boy for the industry as it is the only unicorn EdTech startup in India. Having raised over $1.5 B in funding, acquired rivals like Doubtnut and collaborated with Disney’s app for younger kids, it aspires to become a super app in itself.
A glimpse of EdTech Industry in India
The industry has grown rapidly in the last 6-years as it has received 88% of the funding between 2014-19. During this time, It has received an investment of $1.8B. The funding is majorly in the top two growing segments – online certifications and test preparation. The industry is to be valued at $3.5B by 2022 (a Redseer report). The User Base has doubled from 45M in 2019 to 90M in 2020. There are around 665 M wireless subscribers in India.
Leading players which fall in the Soonicorn (soon to become a unicorn startup – with over $1 B valuations) category are Unacademy, Upgrad, Toppr and Vedantu. There’s no doubt that there are a host of other emerging players in the segment. However, the majority of them are yet to monetise their service extended and solution offered. Startups in this dynamic space are focusing on functional value provided to the students. These include doubt solving, premium original content, coaching videos, test preparation, online lectures or even offline classes.
Related: Take a look at how startups are valued
How is EdTech revolutionizing education in India?
Digitizing the whole landscape has not been an easy journey for the likes of BYJU’s and others. However, the leading players have been able to do so with a focus on providing quality content, better education with a variety of options, accessible to all at a lower cost and higher convenience.
Especially in an environment where-in, you cannot travel and the supply for higher education is growing by the day. It also benefits the user to upskill as a professional, prepare for entrance examinations like UPSC or CAT while working at a day-job. Whereas, school students can always rely on digital classes for revisions, tests or doubt clearance.
While most ed-tech startups are following this suit. The ones that are really making any headway are bringing about innovative solutions. Vedantu relies on its flagship WAVE technology – an AI/ML-based real-time interactive classroom for students. Toppr focuses on an interactive concept clarity between tutor & reader. While, Upgrad hosts a really wide variety of professional courses to differentiate itself from the other leading players in the Indian EdTech space.
Funny how all of the above did not exist only a few years ago.
Current and Future growth drivers
- Focus on retaining and increasing unique paid users with consistent service quality
- Penetrating in tier-3/4 cities and Bharat (rural India) which offer immense potential. Great potential lies there. Given that affordability is a major advantage an EdTech provides
- Partnerships or collaborations with education influencers. There’s a lot of independent influencers out there on YouTube, Facebook, etc. Exploring their potential can accelerate the growth of the industry
- Lowering Customer Acquisition Cost (CAC) & boosting user retention by a revamped after-sales service. The courses can be organically tailored in order for them to stay relevant to the customer
- Economical or Lower-cost subscription plans for the EWS without mandatory hardware
Has EdTech in India cracked the profitability code, yet?
BYJU’s reported profit of INR 30cr in (FY18-19) after it tripled its revenue from INR 490cr in FY17-18 to INR 1341cr in FY18-19. However other players are still to crack the profitability code. This pandemic has been a difficult time for students and educators alike but EdTech players can benefit from a reliable option to continue learning. The daily active users are peaking with higher session times than ever and with a widening user base, it is high time that start-ups really pull-up their socks.
Related: Take a look at the pricing psychology and strategies
Pricing is always tricky in the Indian market and startups seem to be experimenting with various permutations and combinations of the revenue models that work the best for them. The image below highlights some of those models.
However, as they say, in the end, content is king. It is the quality of service can keep a returning user satisfied with the overall offering. Which will further generate word-to-mouth referrals in the student community. This can take them on the road to profitability.
Would it be soon? Would it be any easier than normal? Maybe.
What we can say for sure that this mode of education is to become the new normal. EdTech in India is an interesting space to be in and its outlook for the next 5-years is very promising.
Related: Take a look at Pivoting startup Business models post COVID
The piece was written by Geetesh Makkar, a student at SIBM Pune. This is his second industry analysis, the first one was about the Men’s grooming category. If you like the piece, share it with your best buddy on WhatsApp.
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