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The Rise of Edtech Startups in India During COVID-19 Pandemic: All You Need to Know

Editor, TRANSFIN.
Jul 24, 2020 9:16 AM 5 min read
Editorial

A NASSCOM survey found that 40% of Indian startups have either temporarily shut down operations or are on the verge of shutting down on account of the COVID-19 pandemic.

But one sector has beaten the trend and is emerging stronger than ever before - education technology startups in India.

Learn-from-Home

Schools and colleges are going online to continue classes and teaching - and e-learning companies are rising to the occasion. And it’s not just high school and college students who are availing their services; even professionals are employing their products for vocational courses and reskilling programmes.

Meanwhile, CBSE has asked schools to continue teaching with the help of digital learning platforms and provide content to students online. (It also began a podcast to assist schools in their process.) ICSE teamed up with TV channel ABP Ananda to teach students by airing the lectures on television. Some universities are pursuing Netflix-esque “education on-demand” ventures wherein students can record online lectures and watch them at their own time and convenience.

 

On A Roll

What makes learning online an effective alternative to classroom education - besides the fact that it’s a safe option amidst a pandemic - is that it caters to a large audience across geographies at a fraction of the cost. Usually, all you need is a trusty internet connection and you’re good to go - and the fact that India’s internet penetration has exploded in recent years doesn’t hurt.

All in all, the edtech sector has hit the ground running: it is expected to grow at a CAGR of 52% to become a nearly $2bn industry by 2021. Moreover, at a time when so many companies are being forced to lay off staff, e-learning firms are robustly expanding their operations across the country and hiring more employees.

Globally, too, the sector is cashing in on the paradigm shift in education. Global edtech expenditure is expected to rocket to a stunning $10trn by 2030.

But for the sake of brevity, let’s focus on the scene in India. Speaking of which...

 

Which are the Major Edtech Startups in India?

India’s edtech industry is the second-largest in the world after the US. Between 2014 and 2019, at least 4,450 such startups were launched in the country. They provide tutoring for all kinds of streams and segments - including K-12 (kindergarten to 12th grade), undergraduate courses, competitive exams and vocational training.

While most of these segments are dominated by Indian players, the reskilling/certification-based vocational training programmes have some successful international players. Popular examples include Coursera, Khan Academy, Udemy and edX, who offer various“Massive Open Online Courses” or MOOCs, which are video-based certification/lecture programmes on a wide variety of topics.

Coming to Indian players, the biggest name would arguably be Byju’s. Other well-known names include Board Infinity, Great Learning, Lido Learning, Pedagogy, Toppr, Unacademy and Vedantu.

 

Funding Alert

Edtech was the only sector besides healthcare to see a rise in the number of VC deals in H1 2020. Overall, the sector raised $795m in 25 deals (vs. H1 2019’s $296m). 

What’s more, nine startups have raised seed funding, which means investors are willing to bet on the sector, even if it means hitching your wagon to early-stage startups.

 

Challenges Ahead

While the sector is slated for strong growth, there are many impediments that could hold it back from realising its potential. These include:

A complicated maze of education-related regulation.

Education in India is governed by many laws such as the Right to Education Act and the University Grants Commission Act. There are also numerous guidelines by CBSE, ICSE and different state boards. To say nothing of the various state laws and regulations and rules prescribed by countless other governing bodies! (We previously covered the Indian education sector’s legal quandary on our pieces on the draft National Education Policy for school education and higher education.)

The lack of uniform e-learning legislation.

Currently, edtech companies have to deal with a web of regulators instead of a single focal governing body since there is no law to govern the sector. Education in the Indian constitution is on the Concurrent List - meaning, both the Centre and states can legislate on this subject. But a comprehensive law for the sector is yet to be written. The Ministry of Human Resource Department did announce plans to release guidelines for the sector earlier this year, but this is still in the pipeline and the announcement was made only with regard to school education.

Untapped investment potential.

This is actually an extension of the first two points. Investors - international and domestic - would be put off by any regulatory mare’s nest. Furthermore, the lack of clear guidelines on things like IPR, data privacy, accreditation of certificates by edtech platforms, FDI norms etc. Will stymie investment opportunities. True, edtech players have been on a fundraising spree of late, as we have seen, but much more can be done to boost the sector’s prospects.

Patchy and slow internet connectivity.

Particularly in the hinterland - in small towns and villages, where the bulk of the country’s population lives. This is an infrastructure point, but vital nonetheless. After all, you can’t do e-learning offline!

 

Edtech Beyond COVID-19

The big question now is, will the edtech sector continue to boom post-COVID, when schools are likely to reopen and classrooms will be full again? Or will it relapse to pre-pandemic numbers after being the flavour of the month?

It’s still difficult to answer that. On one hand, the coronavirus pandemic has certainly changed the way we view many things for the long-term, if not permanently. The prospect of hundreds of students huddled together in small classrooms for hours on end could continue to be fraught with dangers, especially if a vaccine is delayed. 

Also, rules like social distancing, wearing face masks and using hand sanitizers are difficult to maintain if you’re a five-year-old in nursery school or a teenager playing football with your friends. E-learning solves all these problems, and it’s more convenient, customisable, and far less expensive.

But on the other hand, have we yet reached a stage where technology can definitively replace schools and colleges? Especially in a country like India, where not every household has reliable internet connectivity or apparatus like laptops, speakers, earphones or relevant softwares? And online videos can’t replace in-person interactions with teachers and classmates, which is crucial for children’s all-round growth and development.

Then, of course, there are the numerous policy and legal challenges faced by the sector, which we’ve seen above. 

In the end, will edtech become the “next big thing” in India and online education the norm? Only time will tell!

FIN.

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