Edtech firm Educational Initiatives looks to achieve steady growth

Srini Raghavan, co-founder and chief executive of edtech firm Educational Initiatives (EI), says his company’s revenue in financial year 2020-21 is expected to come in at Rs 84 crore, significantly lower than its target of Rs 120 crore, because of the impact of Covid-19.
 
Raghavan’s firm might be the only one in the edtech space to admit to a lowering of revenue due to Covid-19. No matter which edtech player in India one talks to, it is claiming a stratospheric or at least huge uptick in revenues after the closure of schools and colleges in March. Many players claim Covid-19 has been a game-changer for their businesses.

 
This is not the only distinction between Bengaluru-headquartered EI and other players in the sector. Although EI was one of the early players back in 2001, it remains smaller in revenue terms and is far lesser known than newbies like Byju’s, Vedantu, and Unacademy.
 

The company is best known for two products: Mindspark and Asset. The first is a personal adaptive learning software that helps students navigate through math and science learning at their own pace. Asset is an assessment test, conducted at various stages and across subjects to establish where a student stands.
 
Unlike its rivals, the firm’s approach has been to keep its head down and stick to the knitting. It has resisted the temptation to jump into many new segments as others have done, especially during the pandemic.

 
Towards the end of June, the giant in the space, Byju’s, announced that it was going to offer online live tutoring. It also launched many of its learning products in verna­cular languages. Recently, upGrad bought Gate Academy and made a foray into the test preparation segment. Vedantu, Toppr and others have made similar forays post lockdown.
 
Unlike many of the nimbler players, who have their fingers in almost every pie, EI could appear almost stodgy and remains focussed on the more challenging K-12 space, instead of going “helter-skelter”, as one industry representative described the behaviour of many firms in the field. Industry observers say many players appear to be in the game to “make a quick buck”.

 
EI is not playing the venture capital game either, another card being played by almost all the others. “How valuations of different firms are arrived at and on what basis remains anybody’s guess,” says Singapore-based Sandeep Aneja, co-founder of Kaizen Equity.
 
EI raised $25 million only two-and-a-half years ago from Mumbai’s Gaja Capital. So, Covid has shrunk its revenues, smaller in a niche segment and not batting like all the others appear to be. So why should anybody listen to what Raghavan and his co-founder Sridhar Rajagopalan have to say?
 
For a variety of reasons, but the past is a good place to begin with. Just like there’s a hype around the sector today, there was hype some years ago, but none of those players are around today.

 
Early entrants like Educomp and TutorVista fell by the wayside. In fact, if one dips into history, one finds that virtually the same narrative is being touted by many players today. So, the EI team argues that many existing players will not be there tomorrow, something experts agree with.
 
“From being virtually non-existent a few years ago, India’s edtech sector is a crowded jungle today. Over 4,600 private firms have been set up to try and help improve the country’s failing education system. But nobody expects all to survive,” says Gouri Gupta, head of edtech at Central Square Foundation.

 
Raghavan and Rajagopalan are unflustered by the accusation that EI has been left behind by competitors. EI is in a very different and far more “challenging space”, while many bigger players are in tutoring and online coaching for entrance exams, a more easily monetised segment.
 
Parents are willing to spend any amount on entrance exams and tutoring once the child reaches high school and beyond, as reality nears, whereas they are far more sanguine during the early schooling years.
 
“In the lower classes, parents are not unduly concerned and will not spend more than required,” explains Raghavan. In fact, there is little direct competition in the space they are in, precisely since it’s more difficult. While many of the biggies are in the K-12 space, most are cagey about revealing any kind of break-up of revenues.

 
Moreover, EI has at least two big aces up its sleeve. One, its flagship Mindspark is one of the only products that has undergone a detailed, third-party assessment and found to be effective. The personalised adaptive learning system that it offers has proved its efficacy with math and science.
 
“This is a huge differentiator since very few products across segments in the Indian edtech space have been assessed by a third party,” says Gupta.
 
A second factor working in EI’s favour is its founders, both of whom are more substance than “style” and highly “mission aligned”.
 

An IIT Madras product, who graduated in 1996, Rajagopalan went onto set up the Ekalavya School in Ahmedabad with two of his batch mates from IIM-Ahmedabad, who wanted to help children learn with understanding. Their journey with the running of the school made him realise that the problem was systemic and needed to be tackled on a countrywide basis. That’s how he set up EI in 2001. Raghavan worked on setting up a school for underprivileged kids in Jammu & Kashmir for two years at the age of 20 before going onto making his career in the IT space and coming back with EI to his real love: Education.

 
In keeping with the personalities of its founders, EI does its thing quietly and remains out of the public eye, but has drawn up plans to slowly take its revenues up to Rs 500 crore by 2025.
 
Raghavan says keeping up with the Joneses was never part of EI’s mission and while they may not be the biggest player around, as long as they continue to grow, they are happy. Citing his experience in the IT sector, he says they are happy to be a Manhattan Associates (a US-based supply chain solutions company) and surrounded by Oracles and SAP.

 
As and when players do begin to approach the finishing line, if this tortoise does indeed win the race, it will reestablish the fable that has had children enthralled for centuries.