The Snakes And Ladders Game Of India’s Edtech Industry

India is a land of mind-boggling numbers. As an active participant in the education products and services market, I am no stranger to this. The first slide of every Powerpoint presentation or pitch-deck that I have been privy to in the past few years all shout out the same collection of figures –

• 1.4 million schools
• 220+ million students
• 30,000+ Higher Education institutes

With such a sizable market opportunity and domestic demand, it is only natural to expect a large number of startups and legacy businesses enter this space. While I do not have any data on this, I do find myself coming across more and more Edtech startups at industry conferences and investor pitching sessions.

While sectors like e-commerce have not only produced large companies, but have also produced companies in ancillary services (logistics, payments etc), with the exception of Byjus, edtech has a clear dearth of companies which have built a solid business, or a recognisable brand, let alone both.

Let’s take a look at what is holding this sector back from that ever elusive exponential growth:

Large Number Of Service Providers

There is a saying, that in India, if you are one in a million, then there are twelve hundred others just like you. If you have figured out that there are lots of students in this country, and have created a product or service to sell to them, then you can bet there are many others who have done the same. The result is that school principals and managements are inundated with requests from service providers for the school to adopt their product.

How many ERP’s can a school use? How many Learning Management Systems can a school use? The answer, I hope, should be only ONE. With so many service providers offering largely undifferentiated products, the negotiating power rests solidly with the buyer and service providers will quickly start undercutting each other to try and get that one extra prestigious client and hopefully use that as a marketing tool to capture more customers. The K12 e-learning market is a classic example of this.

OK, I have a product or service that I believe is different from my competition, whats next?

Limited Access To Decision Makers

Schools have a number of stakeholders including the principal, heads of department, school management, and of course the school owners. There is no organised or structured method to first figure out who is the final decision maker in a given school, and then to reach out and start a dialogue with them. Most startups I have met in this space have found it difficult to scale past more than a handful of customers, and even those have mostly been due to introductions made through their personal networks.

A close friend of mine in the health snacks space recently called me up and asked me how he could quickly approach a large number of schools and get his product adopted. In the words of Simon and Garfunkel, my only response was ‘the sound of silence.’

I have an awesome product, and I’ve met the school owner, and he wants to implement it! I am unstoppable!

Resistance From Teachers

Not so fast buddy. The school owner may love your product, but the ones who have to actually use and implement it are the teachers. While todays children are growing up in an environment where technology is ubiquitous we must keep in mind that a large number of teachers are still not very comfortable using technology in the classroom. Many teachers actually find technology to be a burden and adding to their already torturous workload. I have seen many instances where a school has implemented a technology solution, but over time realised the teachers are just not using it, and eventually the shiny new tech products are lying unused, and the classes are bing taught by the good old trusty blackboard.

Resistance From Parents

Every market has its share of disingenuous individuals, and the school market is no exception. In most cases, when the school is looking to implement a new product or teaching delivery tool, parents would be asked to shell out some money for the implementation and use of the product. Parents have become more and more skeptical of such moves by schools and with enough backlash from parents, schools have backtracked on their decision to implement new teaching-learning aids.

I’ve bagged a contract with a large school and my product is being used by all the teachers. This is going to be great repeat business for me every year! 

Benchmarking – Is Your Product Having An Impact?

Most conversations I’ve had with edtech startups go something like this:

Startup: Our AI chatbot helps students learn math much faster than previous methods

Me: Great. Do you have any data to back this up?

Startup: No, but we have these emails from students who said they love our product!

Me: That’s great, but can you prove it’s helped them learn faster or better than regular teaching methods?

Startup: We can’t prove it, but it probably does.

No matter how much a parent, teacher or student likes your product, unless it is having a measurable and visible positive outcome, it will only be a passing trend. With education being such an important part of the Indian culture most parents are looking for ways to get a leg up on the competition. It pains me to see how many startups are not benchmarking their products against regular methods of teaching. Your competition is not just other edtech products, but is also the product/service/method you are trying to disrupt.

The companies that are benchmarking their methods do need to wait it out, as it takes an entire school year before you can gather your first set of reliable data. This however means that product cycles take a lot of time, and the Silicon Valley mantra of ‘fail often and fail fast’ does not apply to edtech.

There are other hurdles such as problems with connectivity in non-urban schools which also hinder the growth of edtech companies, but with penetration of devices and mobile networks, this should hopefully not be a problem in the near future.

Oftentimes for companies entering the edtech space, it can feel like a game of snakes and ladders. Just when you think you have managed to navigate through the path of differentiating yourself, convincing teachers, parents and students, and have gotten the school management on board, some backlash for a seemingly insignificant reason brings you back down to square one.

The Silver Lining

There are a small number of companies which have created solid business models and are servicing the needs of parents, teachers and students. I have interacted with a few such companies, most of which are in the market for a bridge round, as investors are still wary of participating in a Series A in the edtech space. My advise to these companies is to hunker down and conserve cash as education is a slow burn space. Although growth will be slow as compared to other industries, I am sure investors will see the value and potential of those companies that have managed to build solid businesses in spite of all the challenges they have had to face to get there.