What with the near daily alarming reports about a biggie like Byju’s, you’d be forgiven for thinking the Indian edtech sector is in deep trouble. However, it is not all doom and gloom. While some of the bigger firms are indeed facing a tumultuous time, some start-ups focused on learning have managed to not only scale up but also do it profitability.

The ongoing funding winter did force many edtechs to revisit their growth plans and cut costs, but this only served to help them raise funding and record impressive growth too.

In 2023, the sector cumulatively raised $311.5 million across 75 rounds, which was significantly lower than the $2.4 billion raised in 2022 across 238 rounds and the whopping $4.1 billion in 2021 across 364 rounds, according to data from market intelligence platform Tracxn.

This year has seen six funding rounds so far, totting up $10.8 million. 

Edtechs such as Byju’s, which thrived on the massive surge in online learners during the pandemic-induced lockdowns, began slowing down thereafter as students returned to offline modes; but others — including the unicorn Physics Wallah, ArivuPro, and K12 Techno Services — that remained conservative with cash while focusing on growth have managed to stay profitable.

Education pays

Physics Wallah is on course to reporting more than ₹2,000 crore revenue during financial year 2023-24, says its co-founder Prateek Maheshwari.

He credits this to the company’s focus on both academic and professional requirements.

“By empowering students throughout their educational journey — from initial learning phases to becoming self-sufficient skilled professionals — PW ensures that learners are well-equipped for both academic and professional success,” he says.

To widen its offline reach, the company has set up 75 tech-enabled centres across India; and to cater to learners who are more familiar with regional languages, it offers courses in nine Indian languages.

“PW’s primary revenue generation continues to be driven by its online courses, accounting for approximately 55 per cent of its business. This segment has seen remarkable growth, with online student enrolments expanding 2.5 times, from 9 lakh in FY22 to 23.5 lakh in FY23,” Maheshwari says.

The offline student base has grown 5.5 times, with 60,000 enrolments in FY23, he adds.

ArivuPro, an eight-year-old bootstrapped edtech, offers tutoring for commerce course examinations such as chartered accountancy and company secretary. 

It anticipates maintaining a minimum growth rate of 100 per cent for the next two years, driven by a strong demand for the courses, the planned expansion of its offline centres, and diversified educational offerings, says its CEO and founder, Arjun Varadraj.

Revenue is derived from three primary sources: offline classes in Bengaluru and Chennai, live online or recorded sessions, and college tie-ups. “This diversified revenue model allows us to cater to a broad spectrum of learning preferences, ensuring accessibility and convenience for all our students,” says Varadraj.

Recognising the untapped demand in tier 2 cities, the company has entered into partnerships with colleges in several such centres, including Delhi NCR, Gulbarga, Udupi, Kochi, Kolar, and Goa.

Yet another edtech with comfortably flowing revenue is K12 Techno Services, which provides management services to ICSE and CBSE schools right from kindergarten to Std XII (referred to as K12), under the ‘Orchid, The International School’ brand.

It expects to see its revenue increasing from ₹383 crore in FY23 to about ₹450 crore in FY24. After registering a profit of ₹39 crore in FY23, the start-up will remain profitable in FY24, says its founder and CEO, Jai Decosta.

It provides 1,000-plus schools services covering content, marketing, software, curriculum, and security, among others. The partner schools own the land, building and licence. 

From 100-plus, K12 Techno Services plans to increase the network of Orchids schools to 150 in three to four years.

“We sign contracts with schools for 30-50 years. Those students are going to consume my product and they need to go through the whole cycle of the product. That can only happen over a 10-, 20-, 30-year period,” says Decosta.

He points out that industry players have realised that the K12 segment is best addressed through in-person teaching rather than delivering lessons through a device. 

“If you have to be on Zoom calls for eight hours a day, invariably you will open some chat window. The physical [in-person teaching] part of it will continue. How we add on a digital part is still being figured out,” he says.

Future investment

While investors are keenly eyeing sectors such as upskilling and test prep, among other verticals, they are also circumspect about the sector following the Byju’s episode, says an investor.

“The sector may see more consolidation in the near term as investor scepticism will ensure only the strong ones with a clear business model survive,” he says.

However, the edtech industry rests its hope on the rising tide in favour of digital-first learning across age groups, thanks to the accessibility, flexibility and affordability, among other reasons.