Despite Byju's setback, edtech sector rebounds slightly with funding uptick

The edtech sector has attracted $215 million in funding to date in 2024, reflecting a slight improvement compared to the total $321 million secured in entire 2023

The Indian edtech industry is beginning to recover after experiencing a steep decline in funding following the pandemic-induced surge, according to a report by market intelligence firm Tracxn, as reported by the Financial Express. 

Although still in recovery, edtech remains the third-largest sector globally in terms of cumulative investment. So far in 2024, it has attracted $215 million in funding, reflecting a slight improvement compared to the total $321 million secured in 2023. The 2023 total funding figure represented an 87 per cent drop from the $2.4 billion raised in 2022, highlighting the sector's ongoing challenges.

Current edtech funding below 2021 peak

 

Despite the modest rebound, current funding levels are far from the sector's 2021 peak when it raised an impressive $4.1 billion. However, the first half of 2024 showed promising signs, with $164 million in funding—a 96 per cent jump from the $81.9 million raised in the latter half of 2023.

According to the report, key events in 2024 include Avanse Financial Services raising $120 million and the public listing of the online learning platform Lawsikho. Leading the list of top-funded edtech companies are Unacademy, valued at $3.44 billion, Eruditus at $2.9 billion, and upGrad at $1.86 billion.

The Indian edtech sector now has six unicorns, making it the second-largest globally, trailing only the United States. However, acquisitions have slowed, with just one acquisition in 2024 compared to 13 in 2023 and 26 in 2022, it added.

The report also pointed out that most recent funding has been concentrated in late-stage rounds, with investments peaking in 2021 before plunging in 2023. Early-stage investments have followed a similar trend, and seed funding has dropped sharply to $8.5 million in 2024 from $156 million in 2022.

Optimism about edtech growth despite setbacks

Despite challenges such as a return to traditional learning and reduced demand for fully online courses, experts are optimistic about continued growth, particularly in areas like professional upskilling and innovative online programs that fill gaps in traditional education.

Government initiatives like the National Education Policy (NEP) 2020 and partnerships with edtech companies are expected to drive future growth by promoting digital learning and fostering collaboration between the public and private sectors, the report noted. As the sector evolves, a blend of offline and online education is becoming more prevalent, supported by emerging technologies like artificial intelligence (AI) and voice-based tools in classrooms, the report added.