Indian Edtechs feeling the heat wave

As the pandemic is mostly getting over, India’s EdTech industry has started feeling the heat wave that is arriving towards their business. With schools and colleges opening up, the demand for online tuition is almost soaring and affecting the revenue of these companies significantly in the past few months.

The edtech companies are the worst-hit among all startups as funding dries up because of the recession, among other reasons, forcing them to lay off employees.

According to a survey, Indian startups have already laid off nearly 10,000 employees this year—about one-third of those are from the EdTech industry. In many cases, these are teachers and educators that have been working from home during the pandemic, when the prospects of startups were booming.

This sudden increase in competition led to a number of other changes in the digital market. Owing to the increased number of advertisements for similar products, the cost per conversion escalated multiple times.

This drastically increased the cost of investment in the Edtech business as the margin between investment and profit shrank to become thinner. This led to incurring losses in most of these companies.

Indian EdTech startups were able to raise $4.7 billion in 2021, up from $2.2 billion in 2020, making EdTech the third-most funded start-up category, after e-commerce at $10.7 billion and FinTech at $8 billion. Edtech companies broke all records in terms of fundraising in 2020 and 2021.

Right from pre-product to late-stage, startups across stages managed to mop up back-to-back rounds without any hassle. Byju’s, Unacademy, Vedantu, upGrad, Eruditus, Classplus, BrightChamps, Cuemath, LEAP, and Teachmint emerged at the top of the list of startups raising money during 2020 and 2021.

Consumers have reported that certain edtech platforms are indulging in predatory marketing practices and unethical conduct, which include auto-debiting course fees from parents despite parents stating their wish to discontinue the course. This led to the government issuing a warning against such practices of some edtech platforms while mulling a common policy to regulate the industry last year.

When considering edtech as a complement to traditional schooling, instead of a direct replacement, edtech modules have an upper hand over traditional textbooks. Better navigation of resources, multimedia graphics and interactive elements allowing for a more engaging educational experience.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA