Can the Booming Edtech Sector Sustain in Post-Covid India?
While many Indian startups have either temporarily shut down operations or are on the verge of shutting down on account of the COVID-19 pandemic, one segment that is emerging stronger than ever before is Edtech. The nationwide lockdown due to the pandemic has enabled these education technology startups to speed up their growth momentum in just about six months.
The Rise and Rise of India’s Edtech
India’s edtech industry is the second-largest in the world after the US. The need for upgrading the online education system has been pending for a long time in India but in the last couple of years the edtech industry has scaled up. According to estimates by DataLabs, between 2014 and 2019, at least 4,450 such startups were launched in the country, spread across various segments such as test preparation, e-tutoring, online certification, skill development, online discovery, and STEAM kit and enterprise solutions.
The edtech space is also the new eye candy for Venture Capital (VC) investments which have almost tripled during January to July 2020 to $998 million, from $310 million, a year ago, making edtech the most funded sector in 2020. Investors say most of the edtech companies are seeing 3-5X surge in customers and anywhere between 50% and 100% growth in monthly revenues in the last 6-8 months, driven by the massive boost in online education since lockdown.
Those edtech firms that are harnessing the true potential of technologies are certainly at an advantageous position. As Rishabh Khanna, Founder of Suraasa, an online reskilling platform for teachers, says, “Companies which will drive the education part on a good tech vehicle will see scale, growth and funding. Investments will flow if the company provides a good consumer experience and has a profitable business model in place.”
Already a major shift has occurred from the physical classrooms to smart devices due to the rise of edtech platforms. No doubt, stakeholders are realizing that by innovating with technologies such as cloud, AI and AR/VR, it can not only have a lot of scope for innovations and scale, but also make edtech a promising sector for investors. In this context, Saiju Aravind, Founder of EduBrisk Knowledge Solutions, mentions that companies need to look at their niche areas such as upskilling trainers, providing augmented learning for students , virtual reality, reporting and monitoring, computational thinking and STEM etc and cater to different market segments, especially the tier ii and iii segments.
Going forward, he believes the industry will see opportunities for more sustainable business models and mature solutions, as they start catering to different income groups and for specialized learning needs.
Edtech’s Sustainability Challenges
Sajith Pai, Director, Blume Ventures believes that despite edtech emerging as one of the clear winners this year, a key challenge for the sector could be the expected post-Covid drop off as physical classes pick up.
The lack of uniform e-learning legislation is a hindrance. Currently, edtech companies have to deal with a slew of regulators instead of a single focal governing body since there is no law to govern the sector. Though the HRD ministry did announce plans to release guidelines for the sector earlier this year, it is still in the pipeline (and shows some developments only with regard to school education). This could be a big put off for investors. Furthermore, the lack of clear IPR guidelines, data privacy and FDI norms etc may dampen investment opportunities.
On the technology front, unreliable and slow internet connectivity, especially in small towns and villages, where the bulk of the country’s population lives, can stymie the edtech growth. According to the National Sample Survey report on education, only 8% of all Indian households with members belonging to 5-24 age-group, have access to both computer and internet. While it is possible to access online classes on smartphones, only 24% of Indians own smartphones. And there too, very few students have the ownership of the device. If parents are able to arrange smartphone or laptop access for their children to attend online classes, it often interferes with their office schedules. And not to forget, the cost of 4G data packs is turning out to be an expensive affair.
Edtech in a Post Covid World
Despite these and other challenges the road ahead is bright for edtech companies. It is expected that the upcoming 5G will further strengthen the reach and drive penetration across tiers. Emerging technology adoption such as cloud computing, AI and AR/VR will further drive the growth, even though one cannot rule out greater consolidation in the form of strategic partnerships and mergers in the sector.
However, its growth seems unstoppable, as the coronavirus pandemic has certainly changed the way we view many things for the long-term, if not permanently. The prospect of hundreds of students huddled together in small classrooms for hours may be precarious today, especially if a vaccine is delayed.
But we also understand that rules like social distancing, wearing face masks and using hand sanitizers are difficult to maintain. Think of a 5-year-old kid going to school or a teenager playing football with friends. Moreover, in a country like India, where not every household has reliable internet connectivity, and basic devices like desktop and laptop PCs is a luxury, edtech players may have to constantly reimagine and come up with newer business model for growth.
More importantly, those who are in favor of ‘online education movement’ should know that online videos and images can’t replace in-person interactions and bonding with teachers and classmates, which is crucial for children’s all-round growth and development. In such a scenario, if edtech sector would continue to boom post-COVID, when schools are likely to reopen and a classroom begin in full swing, or relapse to pre-pandemic numbers, is a space we need to watch.