At $568 Mn, Edtech Funding Continues To Sulk In 2024, Revival Anticipations Timid

As 2021 came to a close, all eyes were on the Indian edtech sector for a number of reasons. Buoyed by pandemic-induced growth and rising digital penetration, edtech ventures emerged as the poster child of the Indian startup landscape, raising $4.6 Bn in funding and minting two unicorns. 

Suddenly, all hell broke loose in 2022, and the Indian edtech was left stranded for funds. That year the edtech funding halved year-on-year (YoY) to $2.44 Bn. However, this was just not it. In 2023, Indian edtechs starved and cried havoc as funding fell to a mere $283 Mn. 

What was once a bright spot on India’s startup map, fell like a house of cards once the nation returned to business as usual and offline education resumed. 

However, beyond this, largely to blame for this reversal of fortunes was the funding winter, internal squabbles, lax corporate governance guardrails, issues with product-market-fit (PMF), high cash burn and no clear focus on profitability and sustainable growth. This dented investors’ faith in the sector so much so that the ripples were felt throughout 2024.

As per Inc42’s Annual Funding Report, 2024, Indian edtech startups raised more than $568 Mn in 2024, up from $283 Mn in 2023. However, the deal count took a major hit, plunging over 38% to 29 in the year under review from 47 in 2023. 

This decline in the number of deals could be attributed to big-ticket startups lapping up hefty rounds. For context, Physics Wallah raised a $210 Mn round in September 2024 while Prosus-backed Eruditus secured $150 Mn in a Series F round led by TPG a month later. Together, they accounted for nearly 62% of the total capital raised by Indian edtech startups this year. 

On account of fewer deals materialising, the median ticket size of edtech startup investments fell to $2.3 Mn in 2024, down 23% from $3 Mn seen in the preceding year. The number was also lower than in 2022 when the median funding ticket size stood at $2.5 Mn.

Notwithstanding fewer deals and higher investor interest towards late-stage startups, edtech emerged as the eighth most funded sector of 2024. Now, let’s dive into how edtech fared on the funding front in 2024.

Access Free Report

Down But Not Out

A breakdown of the funding raised by Indian edtech startups in 2024 reveals interesting trends. As per the Inc42 report, online certification and test preparation segments saved the edtech sector last year. While the former bagged $216 Mn, the latter secured $212 Mn during the year

Together, online certification and test prep accounted for 75% of the total funding raised by Indian edtech startups last year. 

K-12 took the third spot by raising $53 Mn last year. Trailing were edtech SaaS and skill development startups, which raked in $46 Mn and $37 Mn, respectively.

In terms of deal count, skill development took the pole position with 12 transactions, followed by K-12 and edtech SaaS with four deals each. The heavily funded test prep and online certification sub-sectors took home three deals each. 

Growth Stage Powered The Edtech Engine

According to the report, Indian growth-stage edtech startups raised $288 Mn last year, accounting for 8.2% of the total $3.5 Bn raised across sectors at this stage in 2024. Growth-stage edtechs clinched 12 deals in 2024.

Similarly, late-stage edtech funding accounted for 3.6% of the total $7 Bn raised across sectors in this stage last year.

Meanwhile, the action on the mergers and acquisitions (M&As) front was dull this year. The sector saw five M&A deals versus 13 in 2023. Veranda’s acquisition of Tapsaya for INR 362 Cr was one of the biggest last year. 

Moving on, the year stands in contrast with how the edtech sector has performed over the 10 years. As per Inc42 data, K-12 has been the most funded sub-sector in the edtech space in the past decade. 

Between 2014 and 2024 end, Indian K-12 startups raised $5.8 Bn in 235 deals. Online certification took the second place with a funding of $2.5 Bn in the past decade, followed by test preparation with $1.4 Bn during the same period. 

The funding winter of the past few years could have something to do with this rationalisation as the usual K-12 models have taken a backseat, with more nuanced hybrid models and upskilling platforms taking the lead.

Overall, Indian edtech startups have secured more than $11.2 Bn in funding in the past ten years across 700 deals.

Meanwhile, in terms of geographical split, Bengaluru continued to be the de facto home for edtech startups. Edtech startups based out of the city have bagged $6.9 Bn in funding between 2014 and 2024. 

Alongside, Mumbai was the second most funded edtech hub in the country, cornering $2.6 Bn in funding in the past ten years. Delhi NCR secured the third place, raising north of $1.1 Bn in the past decade. 

Access Free Report

Peering Into The 2025 Edtech Crystal Ball

As we stand on the precipice of 2025, the year going forward may not bring with it happy tidings as the homegrown edtech ecosystem would have wished for. Inc42 estimates that the funding for the edtech sector may decline to a mere $400 Mn in 2025. 

Largely to blame for this are the wary VCs and PEs that have spent billions of dollars to prop up the homegrown edtech sector but to no avail. Investors now want to back proven business models that have a clear path to profitability and sustainable growth.

Another key theme that may emerge this year would be a significant wave of consolidation as markets mature beyond the pandemic boom. For starters, there is also the talk of the unicorn Unacademy being on the market for sale.

Meanwhile, emblematic of the larger churn within the edtech sector, the once poster child of the sector, BYJU’S, is likely headed for a shutdown. 

Struggling with corporate governance lapses, a financial mess and serious allegations against cofounder and CEO Byju Raveendran of misappropriation of funds, the edtech juggernaut went into the insolvency resolution process in 2024. BYJU’S may find a suitor in 2025 that will either sell its assets or put a new management in place and start anew.

Besides, the Indian edtech landscape may see the emergence of new hybrid models at the intersection of online and offline models, particularly in test preparation and skill development segments.

On top of that, AI-powered tutoring could pave way for the emergence of new use cases with automation ruling the roost and streamlining their edtech operations. Inc42 also sees gamified education emerge as a key segment to watch out for in the edtech sector. 

In what could also set a new benchmark for India’s edtech ecosystem, 2025 would also see the potential initial public offering (IPO) of sector giant Physics Wallah (PW)

Beyond this, the ongoing year may see edtechs focus more on trimming losses and chart a clear path to profitability. While it remains to be seen whether they eventually succeed on this front, all eyes will be on the next evolution of India’s edtech ecosystem as it navigates its complex blend of challenges.

[Edited By Shishir Parasher]

Access Free Report