Articles by ecothrust at Technorati Headline Animator

Monday, June 13, 2022

Ed Tech startups reorganise, as funds dry up, separating the men from the boys


Physicswalla succeeds as Ed Tech Unicorns Struggle Despite Adequate Funding 

India has 14 lakh schools for 32 crore odd student population. Of this 60% students (190 million ) go to Government run schools and 40% students ( 130 million ) go to  private schools.  Schools were closed for 9 months of the year due to  lockdowns and economic uncertainties during the pandemic. This affected the basic economics of the  school infrastructure across the nation both for Government and private run schools as well as colleges. But it also created an opportunity for online education. Not only startups with liberal VC funding but even established universities like MIT and Harvard jumped in to expand online learning courses   But since India’s  aspirational student community was not ready to give up, the demand for online education grew stronger by the day. Two types of ed tech companies entered the fray. Some were those who were bootstrapping and were operating as non profits or low profits and growing organically till they achieved scale. Then there were others like Byju’s  who latched onto opportunities and secured VC funding from multiple global investors at an early stage to enter the lucrative top end of the market. 



Among the Ed tech companies catering to the bottom of the pyramid is Rocket Learning founded by Azeez Gupta that develops the basic foundational concepts for children upto the age of eight in math, science and languages. They currently work in two languages of Hindi and Marathi in four states of Maharashtra, UP, MP and Haryana with 8000 teachers and 100,000 children. Another successful grass root startup is Physicswalla which was founded by Allahabad based Alakh Pandey and Prateek Maheshwar in 2016 initially as a YouTube channel to assist engineering and medical students in the joint entrance exam. In 2020 it launched its app and website and turned profitable by the next two years with 500  teachers educating 6 million students. In 2022 Physicswalla became India’s 101 unicorn raising $100 million in its maiden funding round and becoming the seventh Ed tech unicorn after Byju’s, Unacademy, Eruditus, Vedantu, UpGrad and Lead School. Pandey plans to go vernacular in 9 Indian languages after this round of maiden fund raising. If he succeeds he will redesign the entire Ed Tech industry so heavily focused on English language students at the the top of the pyramid.

                                                        

               
                                                   
The Annual Status Education Report after the 1st wave of the pandemic done in October 2020 by education NGO Pratham revealed that about 43.5% of Government school children had no access to smartphones. While most students received textbooks, only a third of the students received learning materials through WhatsApp, phone calls, videos and online classes. A similar conclusion was reached by the Azim Premji Foundation which undertook a survey for disadvantaged children in five states of the country. Online education which is still in its early days was only helpful for about 30% (100 million) students across the country as per these surveys. 

The funded Ed tech startups targeting these 100 million students at the top of the pyramid are reportedly in trouble with revenues falling short of expectations. In the past five years they have attracted an amazing $4billion of investors money. But their performance has been below par. Even the leader of the pack, the Bengaluru based Byju with a mammoth valuation of $40 billion and an annual paid subscriber base over 5 million students is under pressure. In the year 2021 Byju’s took the acquisition route and bought the coding tutorial services WhiteHat Jr for $300 million to gain traction. Soon after 800 teachers who were working from home resigned  after they were asked to report to office. So the expensive acquisition that was done by Byju’s, actually  lost the  expert pool of coders they had paid for. Thereafter they acquired the JEE tutorial services Aakash  Educational with 200 centres across India and a student base of 250,000 for $950  million, which was another pretty expensive acquisition. It remains to be seen how Byju uses to asset to scale up its online learning platform business.

Lido Learning founded by the former VP of Byju, Sahil Sheth in 2019 and funded by Alibaba,   Ronnie Screwvala of UpGrad  and Vijay Shankar of PayTM sacked 1200 employees in February 2022, whose salaries have still not been paid. In April and May Unacademy and  Vedantu sacked 600 employees each, as both unicorns began restructuring after indifferent results. VC funding of the Ed-tech industry has not yielded the desired results in India. There are reports of poor customer satisfaction and toxic work culture. Now that funding is drying up, many startups will fold up and few    survive and remodel their business. The consolidations and restructuring has already started and will soon separate the men from the boys. 



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