The India edtech story has turned into an edge-of-the-seat thriller. It’s a sector that’s clearly beaten the pandemic odds, while other consumer internet businesses have struggled to stay afloat. National lockdowns that shuttered 1.3 million schools and 14,000 colleges have pushed students online. They’ve now become fair game for over 4,000 edtech startups in India.
The massive opportunity for growth hasn’t gone unnoticed. In the first quarter of the year, Indian edtechs raised over $700 million in venture funding, a 7X jump from the same period last year. Byju’s, India’s largest edtech company, led from the front with a $100 million investment $100 million investment Forbes Indian EdTech Billionaire’s Byju’s Becomes Decacorn After Funding Round From Mary Meeker Read more by US-based venture capital (VC) firm BOND Capital. It took Byju’s over the decacorn line, valuing it at $10.5 billion.
Bigger edtechs—Byju’s, Vedantu, and Unacademy—have also hoovered up a host of smaller, promising startups to build a comprehensive product portfolio. It’s given even smaller edtechs a rare upper hand, where they can demand a higher valuation than they would command otherwise.
For instance, Whitehat Jr, an online coding platform for school-going children, had raised a modest $10 million in its last round in September 2019 at a valuation of $30 million. In less than a year, Byju’s made made The Times of India BYJU'S in talks to buy WhiteHat Jr in $300mn deal Read more a generous $300 million acquisition bid for Whitehat, whose registered user base grew to 20,000 in June 2020.
“Customer acquisition costs have fallen for everyone by at least a third. We don’t need money for survival but to gain velocity,” says Sahil Sheth, co-founder of an online tutoring platform Lido Learning. Lido caters to students from grades four to nine.
This breathless pace isn’t lost on investors, both local and international. Chief among them are Chinese VC firms and strategic edtech giants, who’ve firmly had their finger on India’s edtech pulse.
“The Chinese edtech market has become a prominent unicorn churner. There are companies there targeting public listings,” says an Indian investment official with an investment fund based out of Bengaluru. He wished not to be named because of the fund’s ongoing investments in multiple edtech companies.
Among others, he cites the example of Beijing-headquartered Yuanfudao. In April, the edtech company raised $1 billion from marquee investors such as Tencent Holdings Ltd and HillHouse Capital Group at a valuation of $7.8 billion in a Series G round. Similarly, other companies such as VIPKid, Zuoyebang, and Xueba have also achieved gilded unicorn status.