Can Edtech Retain 2020 Momentum As Schools, Colleges Reopen In 2021?

Can Edtech Retain 2020 Momentum As Schools, Colleges Reopen In 2021?

Can Edtech Retain 2020 Momentum As Schools, Colleges Reopen In 2021?

As students go back to school and colleges, will edtech platforms continue to note the massive uptake in its user base?

The biggest question in the edtech domain is whether it will continue the momentum it showed during fundraising in 2020

While few investors believe that 2021 will be the year for biggest acquisition in the edtech domain, other have placed their bets on 2022

Edtech startups have entered 2021 on a strong footing, thanks to the momentum gained in 2020, as the world stepped into a lockdown and online learning became the new reality. From investors to customers, everyone moved to edtech as the only solution to keep the flow of knowledge going.

The new year is expected to be another great one for education technology, with new business models and markets opening up, but the question is for how long. Now that the vaccine is here, many schools and colleges are looking to resume normal services. Several countries, including India, have already started their dry runs on a vaccine-first world.

Given this, can we expect edtech to grow with the same momentum as it did in 2020? Inc42 spoke to several stakeholders, entrepreneurs and investors well-versed with this domain to understand what may happen to edtech in 2021 and what trends may come even amid these challenges.

Virtual Learning To Go Content-First

Online learning noted a massive uptake in 2020 across age groups and this is likely to continue in 2021, given that residual aftereffects of the pandemic would continue for the next few months at the very least. However, experts believe that to retain the customers, edtech startups may need to spice up their platforms with more personalised content and engaging tech methodologies.

Investors from Bertelsmann India Investments, Orios Venture Partners and BlackSoil unanimously supported the advent of personalised educational content in 2021, which will address distribution issues and could also have a say in market share. Already, startups such as Tekie, Quizziz, Josh Skills and others are innovating when it comes to content in different domains from coding to K-12 learning to upskilling to take on established players.

Meanwhile, Vaibhav Tamrakar of  PGA Labs has raised concerns over the drop in time spent on edtech platforms as traditional educational institutions come back into place. “Time spent on edtech platforms grew by 17% to 9.01 hrs per week during the lockdown, especially across higher grades between grades 9-12. While 36% of these paid users feel that usage would remain the same post-Covid, around half the users will become more selective with their edtech usage once the school sessions start — which explains the time-constraint on part of the students,” he added.

B2B Edtech To Power Educational Institutions

Even when students make it back to schools, the need for education technology is likely to continue. Edtech solutions such as Coursera, BYJU’s and Vedantu helped schools/colleges go online during the lockdown and they are expected to help the institutions reopen, automate parts of the management and deploy learning management systems.

Experts believe that the education system will see greater role players by technology in 2021, but the challenges of selling to schools will remain for the foreseeable future. Orios Venture Partners’ Anup Jain emphasised that while B2B edtech has the momentum, the market will shift towards a more hybrid model instead of a pure offline or online model. This will open a larger opportunity in the B2B and enable edtech businesses. Some of the startups in this segment are Kneura, Classpro, and Upswing Learning.

Similarly, Bertelsmann India’s managing director Pankaj Makkar said, “It’s time for enabler edtech businesses to take the driving seat as the focus shifts to content, distribution, and personalisation.”

Sridhar Rajagopalan, cofounder and chief learning officer of Gujarat-based edtech startup Educational Initiatives, added that school partnerships can have both positive and negative impact on the edtech industry as a whole. Schools need to use products based on independent studies or methods accepted as standards, which is when edtech can have a positive impact in the coming academic years.

Affordable Edtech Products Come To The Fore

The Indian edtech platforms have received the biggest gift from the Indian government in the form of National Education Policy 2020 (NEP 2020), which promotes a digitised form of learning. The policy is ready, solutions are available, but there is still a major thing missing from the big picture. Infrastructure, hardware like smartphones/laptop and affordability quotient are going to be the bigger problem in the advanced imagery.

While the first two issues may not be in the hands of the edtech giants, they need to focus on developing more affordable solutions in order to meet the divide between India and Bharat. This will not only help them get a greater market share, but also offer holistic solutions to meet the education gap globally. Startups that have so far offered premium courses need to cater to the mass market through product innovation similar to what we saw in fintech with loan and insurance products, according to experts.

Edtech M&A To Rise As Larger Players Look To Dominate

Blacksoil’s cofounder and director Ankur Bansal noted that the top five startups accounted for 78% of the total funding raised by edtech startups, whereas the top 10 startups accounted for 92% of the total funding. This has created a lopsided market. He said a key challenge for the sector would be the post-Covid drop off in customer base once physical classes resume, which may dampen the fundraise in 2021 as investors will turn cautious while writing bigger cheques.

While Blacksoil’s Bansal believes that there may be more new funding deals coming the sector’s way, there is a wider scope of acquisitions as the biggest players are well equipped with all the cash flow they need.

“These startups aim to widen and supplement their product offerings which are expected to fuel acquisition. Acquisitions are also expected to capture a wider value chain in complementary areas the potential acquirer is not directly or indirectly present. For example, there has also been wide adoption of edtech products in Tier 2 and below cities which will further create a demand for courses in vernacular languages and can also fuel acquisitions of companies creating niche but not very scalable offerings,” he added.

More Edtech Unicorns Coming Our Way

Unacademy became the second edtech company to enter the unicorn club in India, after it bagged funding from SoftBank in 2020. Meanwhile, BYJU’S entered the decacorn club, increasing its valuation from $8 Mn to $12 Mn. In 2021, the Indian edtech segment is expected to witness the entry of more startups in the unicorn club with Eruditus and Vedantu being the leading contenders.

Eruditus is close to the unicorn club after its $113 Mn Series D fundraise in September 2020 at a valuation of $850 Mn. The company provides executive education programmes in association with global business schools.

Vedantu, which offers interactive online tutoring platform, was valued at $600 Mn in July 2020 during its $100 Mn Series D funding round led by Coatue with participation from existing investors.

All in all, 2020 has been a watershed moment for the Indian edtech sectors, which has managed to increase its user base significantly. Taking the example of our unicorns, BYJU’S added 33 Mn users to increase its user base to 75 Mn and Unacademy tripled its user base to 40 Mn. This momentum is expected to eventually slow down as students go back to schools and colleges. But there is no denying that edtech products and services will remain a viable option for those who may not have the luxury of rejoining their peers in class, thanks to the growth seen in 2020.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.

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