Essence of EdTech
Enough has been said about the plight of education in our country and its about time something was done.
Education has historically been more infrastructure-reliant with affordability and accessibility being the limiting factors. A huge majority of rural and semi-urban population of India continues to suffer from the lack of good quality schools. However, the advent of mobile technology has tremendously improved accessibility and affordability of quality education, thus proving to be a game changer.
EdTech is the answer to the unmet education needs of the billion Indians as it democratises learning and customises the experience with the power to make it local, colloquial and relevant.
I believe, we are on a path to rediscover education as a system, which is so broken at every stage of the value chain. This post aims to explore the entire Education value chain and the disruptions taking place at every stage.
Here is a broad breakdown of the EdTech value chain -
*Blume investments are in bold blue
The K-12 segment has seen the most VC activity and funding of the ~$300+ mn invested into the Indian EdTech space last year. It is also the most conventional segment in terms of the learning approach. The core curriculum has not been (and to a certain extent cannot be) innovated upon, but a lot of auxiliary learning models have emerged harnessing on the enthusiasm of parents to better equip their children to take on their next challenges — board and university entrance examinations. The classroom teaching experience is still broken and hence we believe that models like Flipclass provide compelling use cases.
India’s university entrance examinations are notoriously famous as one of the most selective and difficult exams in the world, hence the paranoia surrounding them, which transformed entire towns like Kota into coaching zones. Platforms like Toppr, Plancess have brought this traditional coaching experience online with better content and advanced adaptive learning techniques. But plateauing growth concerns continue to plague this segment as acquisition costs remain high and it takes a longer time to change the customer behaviour.
At the other end of the spectrum (UPSC, PSU jobs etc) are startups like Mockbank, OnlineTyari who are prepping new audiences who are gearing up for online examinations for the first time. Aiming to create a new segment, Unacademy, Pagalguy are innovating on peer-to-peer learning platforms via engaging education networks.
A commonly observed belief in the investment community that Education is not a lucrative play, is untrue given the fact that India’s education market is estimated to be Rs 1,71,078 crore and education is one area that has witnessed one of the fastest growth rates among different expenditure heads of Indian households. From the venture capital perspective, any EdTech bet is a bet on the evolution of customer behaviour as the monetisation currently remains tricky unless the offering is commoditised to deliver value in a targeted fashion.
The freemium models might work here as the consumers are willing to pay once they learn the importance of the product. Another metric to look for in an EdTech play is to gauge engagement more than monetisation at the early stages. Also the risks in models like Unacademy is on the shift to self-learning from the classroom-learning model and risk of low quality content as education networks still follow the 1,9, 90 rule — 1% create content, 9% engage and 90% merely watch/follow.
Overall, the belief is that EdTech investments are a value chain play as the solutions are different for each facet of the consumer/student life and also for different segments.
