Last year, industry body ASSOCHAM released a report which depicts the horrible state of education in India and said that the country will take 126 years to reach global education standards.
According to the report, India spends a mere 3.83 percent of its gross domestic product (GDP) on education. Moreover, shortage of quality teachers is among the major challenges facing the education sector.
Experts say that way back in the last decade, when startups started emerging in India, new-age entrepreneurs observed the gap in the education sector and saw an extensive market potential in the education category. In the past eight to nine years, a large number of startups have been trying to address the existing challenges in education through technology as well as digging up business opportunity.
Going by media reports, edtech startups seem to hold their ground in the country, with rising popularity, fundraising activities, and increasing business opportunities.
Let’s discuss the obvious
A report released by RedSeer Consulting in 2016 stated that the market size of online supplemental education opportunity in India was expected to touch $2.5 billion in the same year and was poised to grow at 15 percent over the next three years.
According to the report, the addressable demographic of online supplemental education in the country was 20 million students studying in classes 6 to 12. These are the students who would be willing to go online to access supplemental education.
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It further stated that a large number of students hail from tier 2 and tier 3 cities and are paying for offline tuition classes. Such students are an important market to target for players in the online supplemental education space.
“India has the largest K-12 education system in the world with over 260 million enrollments. Lack of access to good quality teachers, one-size-fits-all approach, and learning driven by fear of exams have been the main reasons why India consistently ranks low in all global education indexes,” explains Byju, CEO and Founder of Byju’s.
He confirms that while India has been big on traditional schooling and learning techniques, use of technology can truly bring in phenomenal changes in the education landscape.
Industry experts concur with the view and say that the market opportunity is huge and there is a lot of business potential in it. This has probably lured entrepreneurs to create solutions for this category. Besides, investors are also putting their faith in the edtech segment and have consolidated the general perception of immense potential in this market.
In 2014, around 44 players raised a total of $96 million in the education category. Interestingly, the entire funding wasn’t garnered by edtech startups alone, but some conventional education providers and publishers also raised investors’ money. In fact, the biggest investment was raised by a conventional publisher, S Chand, which closed a $27 million funding round led by IFC and Everstone Capital.
In 2016, investors’ interest in the edtech segment further increased, which led to funding of more players and investment of more money. Last year, around 58 education startups collectively raised investment of over $210 million. The top five were Byju’s ($125 million), EduPristine ($10 million), Avanti Learning ($5 million), CueMath ($40 million), and Simplilearn ($30 million).