How the pandemic has caused a surge in EdTech investments
Education technology (EdTech) in India drew well over $2 billion in funding this year, sparked by the widespread shift to online education due to Covid-19. A new PGA Labs and Indian Private Equity & Venture Capital Association (IVCA) report elaborates.
A shift is underway in India’s education landscape: online learning was once shunned but is now the top priority for all education stakeholders. PGA Labs – the market intelligence wing of management consultancy Praxis Global Alliance – collaborated with IVCA to examine this shift, and its implications on a budding EdTech sector.
The backdrop is one of the largest education industries in the world, featuring 360 million learners as of this year according to PGA Labs. The majority of these are in the K-12 segment, while the rest are spread across pre-school, college and corporate education. Historically, regulations in this mammoth sector have been stacked up against online education, for security and legitimacy concerns.
This was before Covid-19. A year into the pandemic, schools in India are yet to reopen physical classes, and most education for the year has taken place online. All of a sudden, online learning has become the only way to sustain education in the country, and the government has been quick to respond.
In July, the government launched the National Education Policy (NEP) 2020 – a drive to transform education in the country by 2040. Spending has been increased, the curriculum modified, and far-reaching measures have been taken to improve accessibility. Also in the mix is a relaxation of laws around online learning.
All things considered, India’s online learning landscape is now poised for a boom. According to PGA Labs, education spending in India currently amounts to nearly $120 billion, spread across pre-school, primary, secondary and higher education, as well as supplementary education such as test preparation and private coaching.
And this is only growing. In the lead up to 2025, India’s education market will double to roughly $225 billion, marking a compound annual growth rate (CAGR) of 14%. Having occupied a limited share of this market so far, online education will likely take the lion’s share in the near future.
Helping this shift along is the rapid spread of Internet access in India, not only in big cities but also in the Tier 2 urban world and rural areas. By 2025, India is expected to have 850 million online users, setting the stage for a vibrant e-learning market. Having identified the opportunity, the private sector is now swooping in.
EdTech investments
This year, the majority of online learning has come by attending virtual classes via communication platforms such as Skype or Zoom. Around 30% of students have supplemented this process with EdTech tools from their school or education institution, while 10% have explored independent EdTech platforms.
According to PGA Labs, this scenario is changing. For the last five years, EdTech investments in India have fluctuated between $200 million and $800 million. This year, investments skyrocketed beyond the $2 billion mark, flowing into a number of major EdTech players in the country.
Byju’s – a K-12 subject and exam preparation app – as well as live coaching platform Unacademy drew the biggest investments of $200 million and $150 million respectively. Executive education programme Eruditus also raised more than $110 million, while live K-12 and exam prep platform Vedantu drew $100 million.
Other big winners include startups Toppr and Next Education, as well as Cue Math, Varsity and Auxilo, among several others. Evidently, many have realised the opportunity in India’s EdTech sector. With market factors unfolding as they are, this vibrant landscape is only expected to expand at rapid rates in the near future.
