Covid-19 pandemic puts the bloom on edtech sector as learning goes online

Start-ups jostle to tap India's $180-billion education sector as Covid-19 forces learning to go online

The Indian Premier League’s (IPL) 2020 edition is the most highly anticipated cricketing event compared to the previous seasons due to the disruption caused by the Covid-19 pandemic. Big companies such as Tata Sons and Reliance Jio are eyeing the title sponsorship of IPL, which would be held in the United Arab Emirates, to replace Chinese mobile phone company Vivo this season. 

Interestingly, education technology start-ups Unacademy and Byju’s, which compete with each other, have also reportedly joined the fray. This reflects the new levels of ambitions by Indian edtech companies as much of the country’s $180-billion education sector goes online to adapt to the new reality.

The pandemic has been a watershed moment for India’s edtech sector. Since March, Unacademy has doubled the number of active subscribers. The monthly watch time has reached an all-time high of over 1 billion minutes.

Unacademy has opened up the platform to schools and colleges to conduct live classes without any interruptions. The Bengaluru-based start-up was founded by Gaurav Munjal, Roman Saini, and Hemesh Singh in 2015, initially on YouTube in 2010. It now has a network of more than 18,000 educators and 30 million learners. It expects to earn an annual recurring revenue (ARR) of about $300 million in the coming years.

According to industry insiders, big tech companies including Facebook, Google and Microsoft are eyeing investments in these start-ups.

 

 

Social media giant Facebook has already placed its bet on Unacademy. It participated in a $110-million investment round in February. The round, which was led by General Atlantic, also drew funding from Sequoia India, Nexus Venture Partners, Steadview Capital and Blume Ventures. Flipkart’s CEO Kalyan Krishnamurthy and Udaan co-founder Sujeet Kumar also participated in the round, which according to sources, gave the company a post-money valuation of $510 million. Unacademy is now in talks with Japan’s SoftBank and other investors to raise $200 million, valuing the company at $1.2 billion. 

“This (online education) is an expansive space and not a winner-takes-all category,” said Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India. “There are many start-ups focusing on various challenges that the segment faces, from providing content in local languages, upskilling teachers and education in new technologies.”

Pahwa said edtech companies have raised almost $1 billion in funding this year. “Investors are also excited that what’s being built in India could be potentially applicable across the world,” said Pahwa.

Indeed, Byju’s strategy to expand in global markets was reinforced when it acquired this month Mumbai based edtech start-up, WhiteHat Jr, which teaches coding to children, for a $300 million all-cash deal. WhiteHat Jr plans to expand to Canada, UK, Australia and New Zealand (ANZ) after strong growth in the US. Since February this year, WhiteHat Jr has been growing at more than 100 per cent month-over-month. Last year Byju’s acquired Osmo, a US-based maker of educational games, for $120 million to propel its global ambitions.

The pandemic has helped Byju’s become a decacorn and cross $10.5 billion in valuation after raising new funding from Silicon Valley investor Mary Meeker’s Bond Capital. Byju’s has now joined the league of 24 decacorns such as TikTok-owner Bytedance and Elon Musk’s SpaceX.

Since the lockdown, Byju’s has seen over 15 million new students joining its platform. Last month, the company launched Byju’s classes, a comprehensive online tutoring programme for personalised after-school learning solutions from India’s top teachers. Byju’s learning app has over 64 million registered students and 4.2 million annual paid subscriptions. Byju’s said it is now inching towards the $1-billion revenue milestone.

Pahwa of EY said there is a ground-swell of support for online education fuelled by penetration into “Bharat” (small towns and rural India). “Edtech companies are more agile and can adapt to the fast-changing environment,” he pointed out.

One such fast-growing company is Vedantu, which provides live tutoring with some of the best-curated teachers. In July, it raised $100 million from US-based investment firm Coatue with participation from existing investors. With this round, the Bengaluru-based firm’s valuation jumped to $600 million, making it the second most-valued company in Indian edtech.

Vedantu grew 220 per cent during the lockdown, with more than two million students attending live classes. With this definitive shift in consumer behaviour, Vedantu is investing to scale impact and get into new categories. Over one million students study live every month on the Vedantu platform. Also, more than 25 million users every month from over 1,000 cities and 40 countries access free content, tests and videos on Vedantu’s platform and its YouTube channels.
 

Coursera, the Mountain View, California-based online learning company, is also witnessing a huge demand in the country. Since March, it has added over 3.6 million learners in India compared to 1.4 million in all of 2019.

As of the end of July, there were nine million registered learners from India on Coursera. It has attracted over 50 enterprise customers including Tata Communications and Airtel. This month, Indian Institute of Technology (IIT) Roorkee partnered with Coursera to launch two new certificate programmes — in artificial intelligence and machine learning, and in data science — as part of the institute’s commitment to making its programmes accessible to learners globally.