Edtech in India is Maturing & Broadening

Edtech in India is Maturing & Broadening

Panelists from the ASU+GSV education summit speaking on ‘Investing in India: Success Stories, Opportunities, and Pitfalls.’

The COVID-19 pandemic has made every parent, college student & professional across the world more aware of online education. With this 10x increase in people looking for online education solutions, existing edtech companies have scaled at unprecedented rates & new edtech startups have jumped into the market in record numbers.

In the midst of this once in a lifetime shift in consumer behavior, the ASU+GSV education summit held in September 2020 took on a different level of timeliness. To reflect on the changes in India from a private spend perspective, panelists – moderated by Kami Viswanathan – from several funds, including Blume, Kaizen, Brand Capital, Lightspeed, and Sequoia got together to speak about ‘Investing in India: Success Stories, Opportunities, and Pitfalls.’ The video recording can be accessed here.

Speaking on the evolution of the edtech market, Dev Khare of Lightspeed stated that until five years ago, the consumer spends in education were predominantly on K-12 private tuitions and college entrance exam preparation; today, the market is maturing, unlocking newer pockets of spend. From his point of view, current environmental dynamics have given place to three new segments that are witnessing rapid consumer adoption –

  1. K-8 segment including extracurricular activities (e.g. music, art & dance), group learning, and STEM learning (e.g. coding)
  2. OPMs (Online Program Managers) operating in the higher education space, assisting universities to go online, or building their own online brands
  3. Professional education for those already in the workforce

He further added that while historically financing has been in unregulated segments i.e. K-12 supplemental learning & test preparation, today the market is seeing an emergence of startups in regulated segments (such as college degrees).

Sam Subramaniam from Brand Capital & Sandeep Aneja from Kazen Capital opined that conventional educational institutes are now beginning to adopt technology inside the classroom & the traditional lines between education & technology are beginning to blur. Sam is of the belief that we have a unique opportunity to create a uniform education OS (operating system) that will enable inter-institute collaboration & internal student assessment, like never before.

Karthik Reddy of Blume Ventures added that the Indian learning market is heterogeneous & stratified on the parameters of income, capability, and language. He further mentioned that we are still far away from being recognized as a one-size-fits-all market, however, a common theme since 2015 has been the democratization of education, with a downward shift in power, in favor of the consumer.

The panelists subsequently spoke on what they look for in new investment opportunities.

Karthik stated that the primary source of conviction for him is the founding team’s capability and drive. Additionally, he added, that while the state of the product may change in its early years, it is important to be building into a large market and to have a forward-looking view of the direction in which the market is headed.

Dev outlined a set of filters that Lightspeed used while assessing the K12 opportunity in the past, namely a) willingness to pay by consumers, b) brand value & recall as education is a ‘trust business’ with a long bake time to build a credible brand and c) novel pedagogical approaches that take advantage of the web’s properties (virtual communities, messaging multimedia, etc.) instead of aping what is being done offline (e.g. taping whiteboard lectures).

He went on to add that as the market opportunity has moved away from K12 supplemental learning into newer areas like higher education & professional learning, the edtech ecosystem has seen an upsurge of founders from non-education backgrounds. This is in stark contrast with the state of the ecosystem 5 years ago, wherein the founders were all teachers or educators, including the founder of Byjus.

Tejeshwi Sharma of Sequoia mentioned that he looks for two attributes, namely a) founders with unique insights into the market and b) strong founder-market fit; in his opinion, different categories merit different archetypes of founders i.e. while an already established category necessitates a founder who thinks product first (defined as an amalgamation of the curriculum, technology & teacher), a founder with an inclination for evangelism is necessary to create a new market category.

The discussion then turned to the learnings from the two edtech unicorns in India: Byjus & Unacademy. Dev mentioned three key learnings –

  1. Provide value-for-money: The analogy is to IKEA in the furniture category, Decathlon in sporting goods, or Walmart in retail. This mass-market value-for-money positioning and pricing also pull in non-consumers, which, as an audience, are many times larger than consumers of edtech a year ago.
  2. Sell education, don’t just market it: Perhaps because education is a non-profit category in many parts of the world, companies are loath to sell. Byju’s invented the inside sales model in edtech that changed the game in sales & marketing for education.
  3. International from India: For edtech ventures in India a) quality content production is cheaper than anywhere in the world, b) India has got a brand in math and science that can be leveraged abroad and c) India has an abundance of poorly-paid offline teachers who can now teach online and earn a good living.

In closing, all panelists were unanimous in their belief that the education market in India – across all segments – is massive & well poised to unlock value for all stakeholders.

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