The Difficult Road Ahead for Indian Edtech

In this video, we take a look at current scenario of Indian Edtech sector and decode the road ahead for these edtech companies.

0:00 Intro
1:28 The Rise of Indian Edtech
2:51 COVID-19's Impact on Indian Edtech
4:17 The Bursting Edtech Bubble
5:27 Bubble Consequences
6:25 Funding Crunch
7:26 The Way Forward
8:52 Inevitable Consolidation
9:59 The Solution to Layoffs

Since the start of 2022, nearly 4,000 people either quit or been fired in this sector. To understand how this happened, we have to look at how did we reach here? Indian edtech as we see today started in early years of last decade. Around 2016, when jio came, suddenly these companies saw huge influx of people consuming this educational content and this was the time when VCs took this business seriously.

BYJU’S raised more than $100 Million in 2016 and became India’s first edtech unicorn in 2018. Companies like Unacademy and Toppr also raised venture capital at this time. This continued on till 2020, when the pandemic hit the world, and all education moved online. In 2020, Indian startups raised $10.14 Billion in total in 2020, and more than 20% of this went into edtech. In 2021,
this number more than doubled to $4.7 Billion. Companies used this money for acquisitions and growth. BYJU’S bought 13 companies including Aakash Institute and Whitehat Jr, spending $3 Billion. Unacademy bought 10 companies, including Prepladder, Mastree and Codechef.

These acquisitions and sharp growth meant that these companies were spread too thin and this resulted in companies lose their focus and move away from their core businesses. And when in 2022, things started opening up, students are now choosing to switch back to a mainly offline educational experience.

These has resulted in declining revenue for edtech startups, which means higher customer acquisition cost (CAC) and now companies find themselves too spread out.

In February of 2022, Lido Learning announced they are shutting down, resulting in 1200+ people losing their jobs. Then in March, Unacademy shut down their K-12 business, and in April it was announced that they’d laid off about 1,000 people. Vedantu was next with 200 employees, and then between 200 and 800 employees resigned when BYJU’S-owned WhiteHat Jr. asked them to stop working from home.

With the decline of revenue, another issue these companies are facing is funding crunch. Now as the demand of edtech is slowing down and number of new customers is decreasing, investors aren’t quite as enthusiastic. The global economy has also taken a turn: the Russia-Ukraine war has caused supply chain issues in almost every sector. These edtech startups are trying to extend their runway in the hopes of surviving the global venture capital shortage and staying alive.

So now, what does the road ahead look like for Indian edtech? It seems we will see more layoffs in the near term and companies will have to take sharp measures like price cutting to stay attractive for students. For example, Vedantu recently launched Ai Live, a cheaper alternative to their main offering, where an annual course costs just 5000 Rs, compared to earlier price of 22,000 to 25,000 Rs.

Other thing these companies will have to do going ahead, is take an omnichannel approach. BYJU’S acquired Aakash for $1B back in 2021, which seems like a smart and long term move now. They’ve also launched BYJU'S Tuition Centre, which combines offline and online learning experiences in 200 cities. Unacademy has launched experience center in Delhi, and they’re looking to open similar centres in Kota, Jaipur, and Lucknow too. Upgrad has acquired offline test preparation institute, The Gate Academy, which has about 50 centers across India. We also have Physics Wallah Pathsala, which is PW’s offline offering for students in a number of cities across India.

Another angle here that is worth covering is market consolidation. It happens when after a boom in funding and new businesses opening up, there is a dry period and smaller companies either have to get acquired or they get out of business as they can't keep burning money like big players.

We saw this in e-commerce back in 2012 and 2013 - you had Snapdeal and Paytm Mall and Shopclues and Ebay, but now, you just have Amazon and Flipkart. Same thing in Foodtech - Tinyowl, Foodpanda, Uber Eats, they all lost the food fight that culminated in Swiggy and Zomato coming out on top. Now same thing is happening in edtech. Companies need to establish a well-defined HR structure and policy, where they hire right candidate and keep them for the long term. This hire and fire approach isn't sustainable in the long run.

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#edtech #startupbubble #byju's

[backstagewithmillionaires]

Which companies in your opinion, will emerge as leaders in edtech?

[nerdtrying]

I spent 50k in byju's and 150k in akash coaching because at that time my parents told me the best thing for you to do is to become a doctor. Now I regret spending this much money for things that didn't serve anything to me.

[Rk-wn]

I paid 7000rs per year to my tutorial center for coaching and tuition, they did very good job standing next to me for every doubt. more human centric. lot of good friends and more socializing after tuition time. more life than in todays tablet
these EdTech's are pathitic

[nerdtrying]

I still remember how employee of byju's forced me and my mother to buy byju's course when I was in 9th class.
I'm not saying byju's is good or bad but sometimes knowledge is available for free and we get tricked for spending alots of money

[adityaranigaon]

I have been having a feeling lately that there almost entire Indian startup eco system is a bubble. From ola scooters to Paytm to Byju's. These startups are spending lots of money on marketting and new investors are getting trapped. Many because of FOMO. When this bubble will burst, many new investors will learn some very old lessons.

[lotli]

The problem with most of these companies isnt their business model, the problem is they want to do in 5 years what normal companies do in 25 years.... Just throwing money at the business is no substitute for YEARS of organic growth which involves making lots of mistakes and learning from those mistakes

[sujitbhar]

Good analysis. Having been a guest lecturer with a PG course at Calcutta University's IISWBM for long, I had to take many online classes as well during Covid. The experience was so dramatically different. A physical classroom is a physical classroom. This will not be replaced in the near future. My schoolteacher friends who have been asked to go online during Covid, are all happy to be back offline. My experience says my students are happy as well. Online in certain formats will stay, but will be supplementary to offline classes; cannot replace them.

[RajSubramani]

You touched upon the gig workers very very briefly. I know gig workers for these EduTech companies are the backbone for growth and quality. But they have been treated as commodities, as you succinctly put it. The data regarding the number of gig workers employed by the EduTech companies is probably sketchy, but many such workers who have excellent reputation and high scores (given by customers - parents and students) have gone on to become independent tutors, also contributing to the slowdown of the companies and complaints that we hear and read nowadays.

[anilraghu]

Edtech was supposed to be less expensive with more free time. Now it's opposite.

[vrindayadav]

I was waiting for this kind of video for long. India's startup ecosystem saw a meteoric boom and this sort of VC bubble burst was imminent. Very well researched, as always!

[Lukky_]

quality of education is more important than revenue and the thing is ed-techs like byjus and unacademy have failed to recogonise that...

[KhanKashifza]

This channel is really underrated, this guy deserve much more appreciation for the quality work.! Good Luck Brother..

[shashanktrivedi]

I own an edtech company Campus 365 which works on the hybrid model and thus we keep growing until now. We always believe that schools and teachers will remain along with online learning, so online can become a personal learner but not a guidance provider.

[carbonurbuddy]

Well we saw this coming... nothing to be too surprised about. When kids start going to school no need for extra education the local tution could do ... except for those taking premier Indian exams rest small kinds would rather enjoy stuff that they missed out on.

[adithyalfc]

too good..i am amazed how you know so much about indian startup ecosystem without being in india. ..just wow

[pdempsey]

Nailed it again BWM, great review of the space. The EdTech space probably needs to check their original TAM guesstimates. 7 years ago saying "600 million Indians will qualify for JEE exam ..." may seem quite silly especially if investors start actually doing their job now. Your addressable market actually only includes people who 1) need your service and 2) can afford it. Go to your current customers and listen to what they say, get your TAM numbers into something that resembles reality, then determine that product-market fit and layout your road to profitability.

[paragsarkar]

You literally nailed it . The fact you are so aware of things around in India must says I am subscribing your channel

[Xavier-elnz]

Back in 2020 when pandemic hit us hard many of friend including me who were planning to go Kota for offline classes shifted to these Edtech like Unacademy and others . But now when restrictions have been removed and offline classes running smoothly all of my friend are now going back to Kota to attend offline classes. I believe it was just a temporary shift to these edtech and now wave have passed there exponential growth is declining. It will next to impossible for these edtech to enter offline market because offline market is already occupied by gaint like Allen which has recently get the funding of 600 million dollar which shows offline is going to regain there lost market in pandemic.
BTW man this video is well researched

[blackhole]

Despite reopening of education, some people still prefer online education but the crowd are not enough to save a million dollar business from sinking. Long term planning keeping all the choas in the mind is the key.

[riteshmukhopadhyay]

well we were discussing among our friends, sooner or later this had to happen.
Thanks team for bringing this to light <3