The struggling Ed-tech start-ups

India’s online education startups are struggling to survive in a post-pandemic world. Most schools and colleges are now open. “In the pandemic, this industry saw a boom. But now they have to refocus and change their business model.

With schools re-opening across the country, demand for online tuition has reduced substantially. A report says, the quality of on-line education has impacted the career of the student, since most of the students have started the work of copy and paste. Secondly, online education doesn’t deliver even 1% of physical school experience.

With the resulting layoffs by the Ed-tech companies, experts are worried that the sector was in a bubble all along, which is finally bursting. With existing funds depleting, and no word on new capital, ed-tech startups are clueless about their future. And now the question arises how can ed-tech start-ups come out of this crisis?

In 2020, Unacademy achieved the Unicorn status, while UpGrad, Vedantu, and Eruditus became unicorns in 2021. India’s first edtech startup, Byju’s, valued at around $22 billion, is among the most expensive start-ups in the country.

Inspired by these success stories, a host of new edtech start-ups have mushroomed in India over the last couple of years, taking the industry’s market size to around $2 billion. In 2021, edtech was the third most-funded sector in India, raising over $4.7 billion in 2021.

All it seems the Ed-tech business is sessional. The educators-turned-entrepreneurs made the start-ups grow during the pandemic, they try to address the gap during this difficult time.

Now there is a sudden decline in edtech funding and the total money inflow in Indian start-ups slipped from $12 billion during the first quarter of 2022 to $7.86 billion in the second quarter.

Also, July month saw less than $1 billion in total funding which is the lowest in the past 15 months. Whereas, India’s education market was projected to increase to $313 billion by 2030. Now the promoters attributing it to business model changes due to the Covid-19 pandemic.

The pandemic helped this sector as much of the country’s $180 billion education sector went online. This made ed-tech space the third most funded Indian start-up category, only behind e-commerce at $10.7 billion and fintech at $8 billion.

In the pandemic, this industry saw a boom. But now they have to refocus and change their business model. All it seems, the companies are embracing the hybrid model and innovating to scale up their offline presence because the market is still big.

So, it is clear that big ed-tech firms with deep pockets are funding their hybrid move to stay in business.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA