VC Funding Driving Startup Behaviour, Which Is Not Good For Edtech Sector: Aakash CEO

Emphasising the importance of both online and offline modes of learning in edtech, BYJU’S-owned Aakash Education Services Ltd (AESL) MD and CEO Deepak Mehrotra said that funding by investors in the edtech space is driving an unwarranted behaviour which is not good for the industry.

Mehrotra told PTI that digital alone can’t meet the aspirations of medical and engineering students who are eyeing to get into premium institutions, and it is important to address the requirements of new learners.

“Investors’ funding is very clearly driving behaviours which are not good for anyone, I only hope sanity prevails,” Mehrotra was quoted as saying by the news agency in response to a query about the need for consolidation in the edtech and test preparatory space.

Mehrotra, who has over 35 years of experience in executive roles in FMCG, telecom, and education industries, was recently appointed AESL’s MD and CEO. The position of CEO at the company was vacant after Abhishek Maheshwari departed from the company in September 2023.

“If a learner that you are talking to is preparing to pick up a premier Indian institution, be it medical or engineering, it needs long learning. I am completely convinced it cannot be done digitally alone,” he was quoted as saying.

He also said that the digital medium is required to address the need of new learners and AESL would explore reaching out to digital natives in the language of their choice by increasing the digital component at the company.

Mehrotra’s appointment came months after Manipal Education and Medical Group chairman Ranjan Pai decided to infuse $50-60 Mn more in Aakash.

Referring to Pai’s investment in AESL, Mehrotra stated that he joined the company at a time when entrepreneurs with solid credentials of building institutions, which have been delivering core higher education for decades, have put their might behind the company.

It is pertinent to note that BYJU’S has been fighting on multiple fronts over the last year or so. From resignation of board members, rising losses, a severe cash crunch, and delay in filing financial statements to its ongoing battle with investors, multiple legal cases and insolvency petitions, the startup, once valued at $22 Bn, has been struggling amid all the problems.

Last week, it was reported that an arbitrator asked the beleaguered startup to not sell 4 Mn shares of subsidiary AESL after Pai’s MEMG Family Office initiated arbitration proceedings against BYJU’S over a breach of terms of a $42 Mn loan.

Mehrotra’s comments come at a time when the edtech sector has been one of the worst hit by the ongoing funding winter. Unicorns like BYJU’S, Unacademy and Vedantu have laid off employees in droves over the last couple of years, while edtech startups like DUX Education and FrontRow shut operations last year.