With investors shying away, Edtech start-up space set for consolidation

Sangeetha Chengappa Bengaluru | Updated on October 14, 2019 Published on October 15, 2019


Edtech start-ups space is expected to see some major consolidation over the next six months as investor interest wanes in start-ups that have failed to scale their businesses.

The first signs of consolidation showed up last May when iNurture Education Solutions which provides industry-related skills courses announced the acquisition of a similar skill-based Edtech platform, KRACKiN. It was followed by the acquisition of job-skilling platform Acadview Software Private Ltd last October by UpGrad, an online education start-up that is promoted by entrepreneur Ronnie Screwvala. Recently, in June, Manipal Education & Medical Group (MEMG) acquired Jigsaw Academy, an online analytics and big data training start-up for students and professionals.

Over the last 6-12 months, bigger start-ups in the professional learning space like Great Learning and TalentSprint have been receiving a lot of inbound interest from a clutch of smaller start-ups in the same space, who wish to either merge, sell out or be acqui-hired by the larger start-ups.

The country is home to around 4206 active Edtech start-ups, of this, 293 start-ups were founded in the last 20 months, as per data from start-up tracker, Tracxn.

“When we started Great Learning in 2012, Jigsaw was the most prominent player in Analytics. At first we partnered with Jigsaw, because we did not have any of our own Analytics content. Over 12 months, we built our own content, assessments and expertise and became independent. We were profitable from the first year, booked revenue of Rs 135 crore in FY 2019 and will end FY 2020 with Rs 400 crore in revenue” said Hari Krishnan Nair, co-founder and Director, Great Learning, which offers programmes in career critical competencies such as analytics, data science, AI, cloud computing among others, at prices ranging from Rs 1.5 lakhs to Rs 5 lakhs for 6-12 month courses.

Pointing out that there are close to 50 professional learning Edtech start-ups in India, Nair said “In the last 12 months, we have seen increasing interest by smaller companies which have been around for at least 5-6 years, approach us to be acquired or acqui-hired. Over the next few months, you will witness further consolidation with 3-4 large players holding 60 per cent market share emerging in the professional learning space.”

This is because 40 of 50 start-ups are offering cheap skilling courses at Rs 20,000 – Rs 30,000, therefore finding it extremely difficult to sustain themselves as cost of customer acquisition has only increased with more competitors joining the fray. Even learners are realising that there is no point in doing short term courses which are superficial and fail to help them clinch jobs, explained Nair. Some of the other biggies in the professional learning start-ups space are UpGrad, TalentSprint, Talentedge, Simplilearn and Edureka.

The MD and CEO of TalentSprint, Dr Santanu Paul was approached by 2-3 start-ups looking to merge with TalentSprint. “We are clocking 50 per cent y-o-y growth and will close FY 2020 at the same growth rate. We play in an over fragmented market where some start-ups that were funded in the early days have been unable to grow and scale because of uncertainty about online education programmes working or not and academic institutions opening up deep-tech education programmes for working professionals, in parallel. You will see the emergence of 3-4 large players and many smaller players in this space” said Paul.

The professional skilling space is one of the biggest opportunities for entrepreneurs to encash as most engineering and non-engineering graduates are not job ready. For instance, the country produces 1.5 million engineering graduates every year but, only 10 per cent of them get jobs.

Asked about consolidation in the professional skilling space, serial entrepreneur and partner, K Ganesh, who sold his Edtech start-up TutorVista to US and UK listed education leader Pearson in 2011 for $213 million said “There is a dire need for professional learning companies to bridge the huge skills gap that exists in the country today. Large skilling start-ups will co-exist with smaller start-ups as this is not a ‘winner takes all’ business unlike the cab-hailing, food delivery and e-commerce businesses. While there will be takers for big ticket, long term professional skilling courses that cost lakhs, there will also be a huge demand for smaller top-up courses that cost much lesser.”

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Published on October 15, 2019
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