The outbreak of Covid-19 brought an unprecedented opportunity for the educational technology (“EdTech”) sector in India. The traditional face-to-face interaction between a teacher and students suffered a setback and almost instantaneously, there was a paradigm shift to the unconventional mode of online learning. This change brought the spotlight on EdTech industry following which it received the requisite financial and policy impetus to thrive through the financial year (FY) 2020-2021. A massive inflow of investments, acquisitions and emergence of new start-ups in the previous fiscal bear testimony to EdTech sector’s meteoric growth.
Growth of EdTech- Turning COVID-19 crisis into opportunity
The nationwide lockdown from March 2020, leading to shutting down of education institutions, propelled an urgent need for them to look for technological solutions and upgrade their technological infrastructure to ensure continuity in education. As an immediate measure, these institutions started relying on third-party video conferencing applications like Zoom, Webex, Microsoft team etc. or on EdTech companies like Byju’s, Unacademy, Vedantu etc for a seamless transitioning from offline mode to online mode of learning.
As per a joint report by BARC India and Nielsen there was a 30% increase in the screen time on education applications on smartphones since the lockdown. Since the lockdown, Byju’s added over 33 million users to its platform to touch the 75 million mark, while Unacademy’s user base had tripled to 40 million user by January 2021. The rise in user traffic was not just among the K-12 and post K-12 students, but as per a recent LinkedIn study, time-spent on online learning shot up among roughly 63% of professionals during the lockdown period, who utilised the time to enhance their skills or to reskill themselves to stay relevant. In the first nine months of FY 2020-2021, UpGrad, a platform providing online courses for upskilling, grew 100% in terms of number of users. Driven by the pandemic, there was also an increased internet penetration in India and by the end of 2020, nearly 50% Indians had access to internet.
The announcement of the National Education Policy (NEP) by the Ministry of Human Resource and Development in the FY 2020-2021 offered a policy impetus to the EdTech sector. The NEP recognises the role of technology in making education more effective. Amongst other things, the NEP envisages the establishment of an autonomous body called the National Educational Technology Forum, which will act as a platform for free exchange of ideas on the use of technology to enhance learning, assessment planning and administration. Further, the calls for investment in digital infrastructure, development of online teaching platforms & tools, and creation of virtual labs & digital repositories under the NEP can potentially trigger a huge public spending in India, if implemented as planned.
The NEP also encourages the utilisation of technology platforms for imparting training to teachers for creation of high-quality online content, designing & implementing of online assessments, and establishing standards for content & pedagogy for online teaching-learning.
The NEP has proposed that coding be introduced in school curriculums as an important skill for students to develop. This has led to increased popularity of coding platforms like WhiteHat Jr., HackerKID, Coding Ninja and Tekie.
Landmark deals in EdTech since start of pandemic
Riding on the first wave of digitisation and favourable policy, the EdTech sector grew both organically and inorganically. The sector saw increased funding and consolidation activities in the entire financial year.
As per reports, this sector received approximately USD 2.22 billion in funding in 2020 compared to 553 million USD in 2019 and out of the total funding of USD 2.22 billion, kindergarden to 12th grade (“K-12”) received the highest funding of USD 19.8 billion. Further, EdTech giants like Byju’s and Unacademy accounted for about 73% of the total funding, by investing USD 1.35 billion and USD 264 million, respectively.
As per Bloomberg reports, Byju’s is currently in the process of raising around USD 1 billion from investors in the said funding round, valuing the EdTech giant at 15 billion USD. Further, in January 2021, Unacademy concluded a secondary transaction funding round wherein Tiger Global, Dragoneer Investment Group, Steadview Capital and General Atlantic purchased shares worth USD 50 million from existing investors. In February 2021, Doubtnut, a multilingual doubt-solving platform, raised INR 224 crore (approx. USD 30 million) in a series B funding led by SIG and Lupa Systems along with existing investors Sequoia Capital India, Omidyar Network India and Waterbridge Ventures also participating in the funding round.
With respect to consolidation, EdTech giants Byju’s and Unacademy took the centre stage to seal a total of four and seven deals, respectively.
Other players were not far behind with Vedantu buying out doubt-solving platform Instasolv in February 2021; UpGrad’s twin acquisitions –(i) a Bengaluru-based coaching institute The Gate Academy in November 2020, and (ii) recruitment and staffing solutions company Rekrut India in December 2020; Lead School’s acquisition of AI-powered gamified student assessment startup Quiznext in December 2020; and Eduvanz, a Mumbai-based fintech non-banking finance company’s acquisition of EdTech startup Klarity in November 2020.
Tech Avant-Garde, an EdTech company focused on digitising schools and announced plans to raise up to 30 million USD (about ₹200 crore) in first round of fundraising to meet its expansion plans.
With respect to emergence of startups in 2020, it is worth noting that there are around 4,530 EdTech startups in India, out of which 435 were founded between 2019 and 2020. Some of the EdTech startups founded in 2020 include LearnVern (founded in January 2020) – an online learning platform that offers job oriented courses in vernacular language, Skillovilla (founded in May 2020) – an upskilling platform for students and professionals, Filo (founded in November 2020) – an instant doubt-clearing platform for maths, science, IIT, NEET and CBSE courses, and BeyondSkool (founded in August 2020) – a live upskilling platform for kids, etc.
The market size for EdTech in India is projected to reach USD 3.2 billion by 2022 and USD 10.4 billion by 2025. Definitely, the digitisation of education coupled with policy impetus through the NEP has fast-tracked the growth of EdTech in India in the last fiscal year. Currently, this growth is largely concentrated around the EdTech giants like Byju’s and Unacademy who have led the fundraising as well as consolidation. The growth efforts are carried out mainly through expansion (by way of product offerings to customers) or through consolidation (by way of acquisition of EdTech startups.)
However, question remains whether the EdTech sector will survive the pandemic or will fizzle out because of return to the traditional mode of education once the classrooms resume. Given the demographics of the country and the deep-rooted conventional educational culture, what are the key challenges and opportunities for the growth of the EdTech sector – watch out for the second part of this blog to seek some answers!
 https://ivca.in/wp-content/uploads/2020/12/PGA-Labs-The-Great-Edtech-Un-Lockdown.pdf; The data is updated till December 10, 2020;