With Indian edtech companies like Byjus, Vedantu and Unacademy getting huge amounts of venture funding, it would seem that edtech is the flavour of the season for investors. However, are the copious investments being put in this space likely to give funds a great exit or is this just another bubble?
A good way to understand this is to discover how edtech companies are doing in other geographies. Investors and entrepreneurs usually look at the United States to get a sense of what technology-based models should work in India. In the case of edtech, however, China offers a better exemplar of what is more likely to happen in India as there are many similarities in both economies.
Before delving into these similarities, lets first see how China’s edtech industry is doing. China has the world’s largest edtech industry with almost 3000 startups in this space. It also has 7 edtech unicorns (VIPKID, 17Zuoye, Zuoyebang, iTutor, Hujiang, Yuanfudao & ZhiHu) compared to two in the United States (Age of Learning, Udacity) and India’s one (Byjus). Almost USD 4.5 Billion is projected to be invested in Chinas edtech space in 2019.
Why has China beaten the United States in this industry? There are some aspects of that country which interestingly mirror the situation in India.
World’s Largest Population
This is the most obvious aspect which leads to high demand for all essential services like education and healthcare. However, India has the world’s largest population of under 25-year-olds, around 600 million, which represent an even larger demand for education than China
Chinese parents give first priority for their child’s education by spending almost 26% of their income for school fees and tuitions. Hundreds of thousands young Chinese sit for competitive exams to gain admission into the very few top Universities in that country. There is also a huge demand for learning English as the Chinese economy internationalizes. India is almost the same as China in each of the above characteristics.
A majority of Chinese edtech companies deliver their services via smartphones. Almost 98% of the Chinese population uses smartphones due to the low price of handsets and data connections. India similarly offers among the lowest cost handsets and data prices in the world with almost 80% of its population online.
It would be safe to say that the traits of the Chinese economy which helped its edtech industry boom find their parallels in India which indicates a very bright future for Indian edtech and may justify the high valuations that companies in this sector command. The new Indian National Education Policy also pushes increased adoption of technology in education like online learning platforms, AI-driven customised learning solutions, video-based learning, peer-to-peer learning, etc in government & private institutions. This could only serve to help the edtech industry further.
In conclusion, it seems there is much to hope for within the hype currently surrounding India’s edtech industry.