Venture capitalists are playing the crucial role of helping businesses and ideas take off across many sectors in India. And this is reflected in the edtech sector as well to a large extent.
“VC investments have often been likened to rocket fuel or running on a treadmill. When we come in and invest we want to see you grow 5x over the next 15-18 months and keep that momentum going after each round of financing.”
Sajith Pai, Director, Blume Ventures, said this recently when asked the strategy behind VC investing in edtech. While Pai’s example is for Blume, the same can be said for the entire VC community when it comes to edtech.
The rise of the likes of BYJU’S, Vedantu, Toppr and others In the Indian edtech industry is down to VCs betting big and directly funding the scaling-up efforts. According to Datalabs by Inc42’s latest report — “The Future Of India’s $2 Bn Edtech Opportunity Report 2020” — 41% of the total investors who participated in edtech startup funding deals in 2019 were VC firms.
Although, the VCs have adopted a cautious approach as indicated by the fact that of the existing 4,450+ startups, only 194 unique startups were able to raise funding. This indicates that investors are backing startups that have already achieved considerable scale, which limits the growth potential of newer edtech startups. As a result, the sector has been able to gain only one unicorn in the last decade in the form of BYJU’S.ORDER YOUR COPY NOW
Yes, when one looks at the immense potential that edtech offers along with the opportunity to scale in terms of a large addressable base, things look pretty good for edtech startups. “Indians spend tens of billions on education for their children as well as for themselves. With disposable incomes to continue to rise, there is a massive prize for the startups that achieve success in this space,” said Anirudh Damani, managing partner, Artha Venture Fund.
So Which Are The VCs Actively Investing In Edtech Space?
According to DataLabs, Blume Ventures have been the most active VC in the Indian edtech ecosystem with 11 deals in 2019. It was followed by Sequoia Capital and Omidyar Network with 10 and nine deals respectively.
Here are the most active VCs in the Indian edtech segment:
Blume Ventures: Blume has made six investments in edtech — all at the pre-series A or seed stage, and as the first institutional investor. Its investments in edtech have been in diverse sub-sectors from online test-prep to gamified learning to B2B white label apps for coaching classes and other segments. Among its investments are Unacademy, which is one of the many online test prep platforms in India and Classplus, which brings a SaaS solution for coaching classes and tuition centres to communicate with students and parents, manage payments and enrolment, and provide analytics around student performance.
Sequoia Capital: The leading VC in India in 2019, Sequoia Capital has been very active in the fintech segment where it scored 13 deals in 2019. Within edtech, Sequoia is just behind Blume with 10 deals in 2019. The key deals in edtech for the VC in 2019 included additional rounds in BYJU’S, as well as Series C funding for Eruditus. It also invested in Doubtnut through its early-stage accelerator Surge.
Omidyar Network: Omidyar Network India looks to work with entrepreneurs in the private, nonprofit and public sectors, who are tackling India’s hardest and most chronic problems. They make equity investments in early-stage enterprises and provide grants to nonprofits in the areas of digital identity, education, emerging tech, financial inclusion, governance and citizen engagement, and property rights. Besides joining Sequoia in investing in Doubtnut, Omidyar backed WhiteHat Jr in its Series A round.
Nexus Venture Partners: Nexus is one of the leading venture funds in India and manages $1.5 Bn across multiple funds. In the edtech sector, Nexus has backed startups such as Unacademy, Quizizz, WhiteHat Jr among others.
SAIF Partners: SAIF Partners’ founder-first focus means it invests in teams that have deep domain knowledge, the desire to create an impact and the right team for problem-solving. In edtech, they have invested in startups such as Toppr and Unacademy among others so far.
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Accel Partners: Accel India raised its sixth India-focussed fund worth $550 Mn in December 2019 to focus on seed and early-stage Indian startups. Edupristine and Vedantu are some of the key investments by the VC in the Indian edtech market.
InnoVen Capital: InnoVen provides venture debt and structured financing solutions to high growth and innovative tech startups. Some of the prominent companies funded by InnoVen India include BYJU’S, Eruditus among others.
Helion Venture Partners: The VC fund has created four funds since 2006. Although Helion is focused primarily on technology companies, it has also funded companies in the environmental technology, education, financial services, and health care sectors. In 2019, it invested in 5 edtech startups including Simplilearn, Toppr among others.
Indian Angel Network (IAN): With investors from 11 countries, IAN’s presence spans 7 locations, which includes cities in India and the UK. The network is sector-agnostic and has funded startups across 17 sectors in India and seven other countries. The edtech companies in its portfolio include Thinkerbell Labs, University Living among others.
India Educational Investment Fund: The India Educational Investment Fund (IEIF), an early-stage impact investment fund. Established and funded by Michael & Susan Dell Foundation, IEIF is a single member, US-based fund designed to be part of a larger effort of the foundation to facilitate early-stage investing, incubation and mentoring support to social enterprises in the education sector.
DataLabs has analysed the future of edtech and learning in India and recorded the growth prospects, the market and consumer-related insights from the booming Indian edtech market in its latest report — The Future Of India’s $2 Bn Edtech Opportunity Report 2020.ORDER YOUR COPY NOW