Edtech was one of the heavily impacted sectors in the 2022 funding winter, with thousands of layoffs across unicorn companies, cost-cutting measures and multiple M&A deals.
According to a businessline analysis, edtech start-ups accounted for over 40 per cent of the laid-off employees among start-ups in FY23. This includes four edtech companies which were shut down in 2022, including Lido Learning, SuperLearn, Crejo.Fun and Udayy. In addition to cost-cutting and lack of funding deals, edtech also saw a departure from online learning-focussed business models. From giants like BYJU’S to newly-minted unicorns like PhysicsWallah, all major edtech companies have moved to hybrid learning by opening offline centres.
An early mover in the hybrid learning space, BYJU’S plans to continue doubling down on hybrid learning in 2023, along with expanding its global footprint and achieving group-level profitability, according to Divya Gokulnath, co-founder of BYJU’S.
“We started preparing for this hybrid future in 2019, and that plan was put into action in 2022 through BYJU’S Tuition Centres (BTCs). The first BTC was launched in March 2022 and has scaled from 0 to 300+ BTCs in less than a year. All these centres are now running at full capacity, and the company plans to open at least 250 more BTCs in 2023, in addition to the existing 250+ Aakash BYJU’S centres across India,” Gokulnath added.
Ravi Bhushan, Founder and CEO of BrightCHAMPS, also believes that hybrid model of education is the future of edtech sector and will see many companies shifting to this learning model. BrightCHAMPS also plans to build a hybrid model for the dissemination of its courses. The company will open two offline centres in Vietnam within the first quarter of 2023.
Adding to this, Mukul Rustagi, co-founder and CEO of Classplus, said: “The shift in behaviour of teachers and students is akin to adoption of digital payments during demonetisation. It won’t be reversed now that they see so much value and convenience in it. Offline learning will continue to happen in schools but a hybrid mode of learning will be the way forward.”
However, Anil Nagar, Founder and CEO, Adda247, believes that online learning is here to stay. “The future of education is online as it is the only way to reach masses and be able to impart knowledge to the last mile. . For Adda247, this has been one of best year — in terms of growth and funding. We feel next year will be even better and a game-changer year with increased student inclination towards online education,” he added.
Setting up of IEC
Beyond cost-cutting and layoffs, 2022 also saw an increased scrutiny around edtech companies for misleading advertising and pending refunds. In January 2022, an industry body called India EdTech Consortium was formed under the aegis of the Internet and Mobile Association of India (IAMAI).
In a span of 1 year of its operations, IEC said it has has institutionalised strong checkpoints (2-Tier Redressal Mechanism & Independent Grievance Review Board), and resolved 95 per cent + customer complaints while also partnering with key industry stakeholders to streamline advertisements and brand communications.
Mayank Kumar, Chair at IEC (India EdTech Consortium) said, “The rising popularity of blended learning has given India’s Edtech ecosystem a strong growth lever. IEC will continue to encourage customers to share their feedback on the kind of learning or services they’re receiving or would expect for enhanced growth. IEC is moving strongly with its agenda of making online education a reality for every Indian household and hence, higher participation from entrepreneurs in 2023 and wider transparency for the holistic growth of customers and brands are expected.”
Investor interest in B2B edtech
In the background of all major edtech companies recording high losses and investors turing conservative, the edtech industry is witnessing more investor interest in B2B aspect as compared to B2C.
“The edtech industry has witnessed more attraction from the B2B aspect than B2C this year. This newfound synergy has fueled growth for many upcoming players. The bull run of edtech in 2023 will be determined by measures such as tax relief, the quickness with which capital is raised for the edtech industry, and how much we strengthen our digital infrastructure and cultivate positive consciousness with regards to the value it brings as a whole,” said Atulya Kaushik, Co-founder, and CEO of PrepInsta.
Upskilling fared well
Upskilling and professional learning as a sub-sector have broadly fared better than the K12 and test-prep focused companies in 2022. Upskilling unicorn upGrad even raised $210 million funding at a valuation of $2.25 billion in the middle of funding winter and acquired multiple companies.
Adding to this, Nishant Chandra and Siddharth Maheshwari, Co-founders of Newton School said, “Skills are in demand and continue to be in demand. As new technological ideas like Web 3.0 and the metaverse gain prominence, it will open up new career prospects for developers and engineers globally, increasing the demand for upskilling in 2023. Further, working professionals have also felt the need to upskill themselves amid tech layoffs. As a result, higher edtech and upskilling appear to be gaining traction with investors.”