‘EdTech start-ups on a roll, raise funding of $2.2 b in 2020’

Indian EdTech has raised $4 billion in the last five years and, in calendar year 2020 alone, start-ups in the EdTech space received a total investment of $2.2 billion, a new joint report by Indian Private Equity and Venture Capital Association (IVCA), and PGA Labs, the market intelligence business of Praxis Global Alliance (PGA), revealed.

In 2019, EdTech start-ups raised investments of $553 million. As many as 92 players received funding in 2020, of which, 61 players received seed funding, the report showed. BYJU’s and Unacademy raised the most capital, $2.32 billion and $354 million, respectively, in 2020. B2B EdTech received total funding of $31 million in 2017-20.

Rajat Tandon, President, IVCA, said: “EdTech is one sector that goes in sync with the Moore’s Law, with the advancing tech, Education Technologies in India have become a change maker. Whereas, these are testing times for so many entrepreneurs globally, EdTech in India has emerged a clear winner. This report also projects how new unicorns are being presented globally, putting India yet again on the globe in regards to tech, innovation and digital consumption.”

Vaibhav Tamrakar, Vice-President, PGA Labs, said: “Digitisation of educational institutions and learning ecosystem, continuous learning for employability and professional career growth, and student-life cycle services such as student housing and fintech in education are some of the white spaces where the next EdTech unicorn can emerge from India in the next decade.”

The report highlighted that the education market in India is expected to grow 2X to $225 billion by 2025 at a Compounded Annual Growth Rate (CAGR) of 14 per cent over FY20-25.

Education is one of the primary sectors under focus by the Indian government. India currently has 360 million learners across age groups, which is expected to grow further with an increase in school and college enrolments. The sector has witnessed growing attention from government with budgetary allocation increasing from $11.3 billion in 2018-19 to $13.2 billion in 2020-21.

The education sector in India is quite fragmented with various players across segments. The past few years have witnessed the emergence of the EdTech sector with supplementary learning opportunities for students and working professionals.

Internet usage

The growth of the EdTech sector has coincided with increased internet penetration in the country, particularly in Tier 3/4 cities and villages. The sector has also seen increased investor activity due to the tremendous growth potential of the EdTech players in India. Segments such as online tutoring and competitive exam preparation have witnessed an increase in investments by PE and VC players in the past few years.

The lockdown imposed due to the spread of Covid-19 has increased the demand for EdTech products in India manifold. In response to the growing demand, EdTech players have scaled up their offerings and new players with innovative business models catering to unserved segments have emerged post-Covid.