Unacademy, Byju’s success lifts fortunes of edtech start-ups

The success of education technology companies such as Byju’s and Unacademy has prompted investors to back emerging startups in the segment.

In February, Byju’s raised $200 million from General Atlantic at a valuation of over $8 billion, while Unacademy secured $110 million from Facebook and General Atlantic at a valuation of over $500 million. GGV Capital, among others, infused $24 million into interactive online tutoring platform Vedantu.

India saw 34 venture capital deals worth $399 million in the edtech space in 2019, according to Venture Intelligence. The top recipients of VC money were Byju’s, Unacademy, Vedantu, Eruditus and MindTickle.

“Byju’s has become a poster boy...and has shown that the model is commercially viable,” said Narayanan Ramaswamy, partner, national lead, education and skilling, KPMG in India.

However, the sector has its own challenges. Between 2014 and 2019, 4,450 edtech startups were launched in India but 1,150 shut shop, shows a report by Inc42 DataLabs.

G.V. Ravishankar, managing director of Sequoia Capital India LLP, which has backed Byju’s, Unacademy and Eruditus said: “Education is a space where Indian parents and students are willing to invest heavily. And, we expect several valuable companies will be built in this sector.”

“Immersive technology can today deliver high quality education for millions of students and professionals, in a manner that is scalable and affordable, and the rapid growth in smartphone penetration and access to low-cost internet have created a massive global education market that is attracting several investors.”

Sarvesh Kanodia, principal, Omidyar Network India, said: “Education is a large market with 260 million children in K-12 and another 35 million in higher education. Estimates suggest that in the K-12 space, almost half of the enrolled students opt for after-school tuitions. There are millions of students preparing for government exams or pursuing skilling courses to get better jobs. Schools and colleges have started investing in technology to improve their own quality. So, there is increasing scope for startups to coexist and succeed in the sector.” Omidyar has backed companies such as Doubtnut, Vedantu and Whitehat Jr.

Tanushree Nagori, co-founder of Doubtnut, that provides video-based solutions in response to students’ queries said that the company’s USP is that they are “building for the student, not for the parent.”

“The biggest challenge that students have while studying, online or offline, is doubt resolution. Nearly 80% of the time spent by the student is on practice and doubt resolution. We provide solutions using technology and content. We have the largest repository of video solutions in the world,” she said. With over 85% of their users from outside the top 10 metro cities in India, the company will soon create content for state board schools.

“...We operate at a much higher ARPU (average revenue per user) than any other operator in this country. Our average ticket size is Rs2 lakh and above, we also have a product for over ₹5 lakh. The reason we command such ARPU, beyond the university partnerships, is that we also hand-hold the learner through the entire journey,” said Mayank Kumar, co-founder and MD of upGrad, an online education venture.

With a constant uptick in demand, he added, upGrad is “growing at over 100% year-on-year”.