Today, Educomp is a withered husk of its former self. Its market capitalisation—a grand Rs 7,000 crore ($980 million) in 2009—has shrunk to Rs 11.63 crore ($1.6 million). It filed for bankruptcy in 2017 as its debt ballooned into thousands of crores, and there have even been allegations of fudging company financials.
Before its fall from grace, however, Educomp was India’s great edtech hope. Its approach was to kit out classrooms with hardware and multimedia learning modules. And it saw some serious traction, as The Ken’s Rohin Dharmarkumar, writing for Forbes India at the time, pointed out:
“Educomp’s services (multimedia content, computer labs, teacher training) reach 23,000 schools and 12 million students and teachers. The company has grown at a compounded rate of over 100 percent over the last five years, making 20 paisa of every rupee earned as pure profit.”
Interestingly, it wasn’t a flaw with Educomp’s core proposition that would prove its undoing. Instead, it was the company’s overreaching. As Educomp began offering financing to schools to buy its products and began setting up educational institutions as well, the company ended up taking on a whole load of debt.
Ordinarily, one might assume that a like-for-like competitor would fill the vacuum left by Educomp. And in a way, it did. India’s edtech space has changed tracks altogether. Where hardware was once king, companies in the space realised that software was the big opportunity. However, Byju’s—the heir to Educomp’s throne—bears much of its predecessor’s aggressive traits. It, too, has aggressively acquired companies and gone the financing route as well.
With the Indian edtech space expected to reach ~$2 billion, according to a report by professional services firm KPMG and search giant Google, there has been an explosion of companies in the space. According to one estimate—over 4,500 edtech companies launched between January 2014 and September 2019. While many of these languish in unfunded obscurity, some—such as Vedantu, Unacademy, UpGrad, and others—are expanding the frontiers of Indian edtech. And a lot of this goes back to Byju’s.
A paradigm shift in Indian edtech
Byju’s was born in the first decade of the current millennium. However, in its original avatar, it was just a chain of coaching centres for the CAT (Common Admission Test, a national-level management entrance examination conducted by the Indian Institutes of Management).
Byju’s as we know it today—the online tutoring and edtech behemoth— gradually came into being around the turn of the current decade as the company increasingly realised the digital opportunity. As we wrote in our 2017 story:
“It changed to offline plus online videos of teachers taking test prep classes. Then it changed to completely online videos and weekend doubt-clearing classes. Then it put the test preparation business on auto-pilot and ventured into a learning app for students in grades 11 and 12. It started with mathematics and physics and soon added chemistry and biology. Fast forward, Byju’s has added courses for more grades; Grade 9 and 10, 8, 7, 6, 5 and very recently, 4.”
Unlike an Educomp, Byju’s put its faith in software. Cheaper and easier to scale, it would allow them to, quite literally, put their educational material in the hands of customers.
As internet data prices have crashed and mobile phone penetration in the country has skyrocketed, Byju’s app-based approach has reaped rich dividends. Through its interactive learning modules and with an aggressive sales strategy, it now boasts over 40 million registered users. Its services span the gamut from grade 1 (Byju’s even has a content tie-up with media conglomerate Disney) to test prep for civil services exams.
Byju’s success hasn’t just encouraged other players to enter the space, it also renewed investor confidence in the sector. Consider this: the $130 million Byju’s raised in 2016 was 81% of the overall investment into Indian edtechs. Fast-forward to 2019 and multiple companies have raised large rounds. Online tutoring platform Vedantu raised $42 million in a Series C round led by marquee investors Tiger Global and Westbridge Capital. Rival platform Unacademy, meanwhile, raised $50 million in a Series D round that included VC firm Sequoia, which also has a significant stake in Byju’s.
Test prep moves online
Similar to how Byju’s has expanded to cover every stage of learning, today’s Indian edtech companies also exist across every level of education. While the K-12 space served as a launchpad for Byju’s digital explosion, others have zeroed in on different market segments.
Take the aforementioned Vedantu and Unacademy, for example. The two companies want to take India’s test prep market online. This won’t be easy, though. The companies they seek to displace—India’s offline coaching centres—have built their reputations over decades. We wrote about this in a piece earlier this year:
“Offline coaching institutes work on the principle of exclusion—high course fees, entrance exams, the need for physical proximity and 9-12 month lock-in periods. Online platforms, though, are turning this on its head.
Without any physical trappings, online coaching platforms can widely expand on the 1:35 offline ratio between students and tutors, and extend access to many more students in search of quality coaching. There are no benchmarking entrance exams to act as barriers, and there’s even the flexibility of bite-sized courses with lower pricing.
The convenience—of price, variety and logistics—has immense potential to disrupt the old guard.”
Today, even the offline coaching centres that Vedantu and Unacademy set out to disrupt are waking up to the need to move online. Aakash, for example, the brick-and-mortar coaching behemoth that controls 5% of the $6.6 billion offline coaching market, wants almost 25% of its business to be digital by 2023. We wrote about this shift, too.
The beauty of the Indian edtech space—and why it is so critical for offline players as well—is that it increases the funnel size for user acquisition drastically. Class sizes are no longer governed by physical limitations, and learners can now plug in from rural areas of the country. The potential to scale is tremendous.
Importantly, with advances in machine learning and artificial intelligence, platforms such as Vedantu are also able to narrow the gap between physical classes and digital ones. Through their AI/ML technology WAVE, Vedantu is able to make learning sessions interactive and allow for real-time interaction between students and teachers. As we wrote in our piece on the company:
“The technology helps break up classes into “hotspots”—the tutor can click any part of the concept on the screen and create a multiple-choice quiz on it. The WAVE user interface also features a sidebar chat window, allowing for real-time questions and feedback.”
No stone unturned
While test prep and K12 may seem like the most obvious segments, there are many companies identifying far more niche areas to operate in. The likes of upGrad, Great Learning, and Eruditus, for example, have hitched their wagons to the upskilling opportunity. Targeted at professionals looking for a leg up in their careers, these companies offer a variety of short-term and longer-term courses as well as executive education courses.
As we wrote in our piece on the various companies battling for the upskilling pie:
“All of these players are counting on one thing—going forward, learning will be a priority that lasts well into one’s professional life. There’s proof for this as well. Degrees alone simply do not cut it anymore.
Several reports have talked about India’s IT skills deficit. According to a report by industry bodies FICCI and NASSCOM and professional services firm EY, 40% of India’s IT professionals need to reskill to stay relevant. In addition, the report states, 37% of the Indian workforce will be deployed in jobs that call for advanced skill sets. As such, the upskilling and certification market—already worth $93 million as of 2016—is expected to be worth $463 million by 2021, according to a report by professional services firm KPMG. A sizeable pie to play for.”
Other companies, meanwhile, have not gone after segments but rather aspects of education. Like Doubtnut and Brainly. Both companies, the former Indian and the latter Polish but with a sizeable Indian footprint, realised that solving doubts is at the core of any learning process and have turned that need into thriving businesses:
“Doubtnut says it receives 200,000 mathematics doubts every day. It has 7 million monthly active users, with over a quarter of these using the platform daily. Till date, Doubtnut has raised around $3.3 million from marquee investors…
…Its main competitor in India—Brainly—fields questions from over 15 million users every month. Unlike Doubtnut, which is programmed to send pre-recorded explainer videos to students, Brainly is an international peer-to-peer question-answer platform, a la Quora.”
And in the midst of all of this, you have the latest entrants to the Indian edtech battle—the Chinese. Most prominently, ByteDance-owned social media platform TikTok.
The platform, which has over 200 million users in India, initially garnered flak for the content being shared on it. Since then, it has sought to change that image by adding an educational aspect to its platform. Dubbed Edutok, it consists of short videos covering various subjects from spoken language to mathematics.
This isn’t just about branding though, as we wrote in our piece:
“In China, Bytedance is already a force to be reckoned with in the edtech market—even compared to major players like TAL Education and New Oriental.
Starting in March 2018, Bytedance has cemented its presence by launching and investing in about 10 edtech products, which skew heavily towards English learning. Perfect for an aspirational, TikTok-like audience.“
Could Edutok be ByteDance’s attempt to test Indian waters? Almost definitely. Chinese players are already entering the Indian edtech market. Vedantu, for example, counts TAL Education as an investor. We even reported that ByteDance’s Chinese rival, YY Inc, is planning to launch a doubt-solving app:
“YY is playing it safe by going into education early—it plans to introduce an AI-powered application modelled along the lines of Indian online tutoring platform Doubtnut, where the app can recognise characters, questions and share solutions.
The application would work only in English for the first three months, following which the image recognition technology will be rolled out for vernacular languages Hindi, Telugu, and Tamil.
Could this be the start of a Chinese edtech invasion? Potentially. Already, China is the world’s largest edtech market, boasting seven edtech unicorns compared to India’s one. Should their arrival materialise, expect the next decade of Indian edtech to be vastly different from the current one.