Santa arrived early for EdTech (2020)
By: Manish Kheterpal
Tags: VC, Edtech, Education, Startup, India

#Education #EdTech #India #EdTech3.0 #WaterBridgeVentures #Perspectives #Byju’s #Unacademy #DoubtNut #Vedantu #Eruditus #upGrad #greatLearning #WhiteHatJunior #LeadSchool #BitClass #BigFatPhoenix #ClassPlus

Background & Disclaimer: Author is the Managing Partner of WaterBridge Ventures, a VC firm with investments in B2C, B2B companies using Tech disruption in critical sectors of the Indian economy, as well as global Tech companies being built out of India. WaterBridge has current (or exited) investments in the EdTech space like BigFatPhoenix Interactive, BitClass, DoubtNut and Unacademy. Author has also invested in some of the earliest EdTech investments in India like Edukart (acquired by PayTm) as well as evaluated dozens of education sector investments like CareerLauncher, Everonn, Educomp, FIITJEE, Manipal Education, Tutorvista across early learning, K-12 and higher-ed. Earlier as a senior investment professional in an education (+TMT) sector focussed fund (Providence Equity), he has had the opportunity to witness the evolution of for-profit companies like Archipelago Learning, Blackboard and Education Mgmt. Corporation in a major market like the US. Thoughts expressed here are of personal nature with the intent of capturing his views on the opportunity what he calls EdTech 3.0 that India is harnessing over the next decade (2020 – 2030). This is the 1st of a series of write-ups articulating India the EdTech 3.0 opportunity.

Sources: WaterBridge Ventures internal analysis, PGA Labs, Tracxn, Avendus

If you live in or follow India and unless you were living in a cave (which is possible given the gloom and doom induced by COVID-19), it is hard to have missed headlines like, “India EdTech received highest ever $2.2 Billion of funding in 2020”. For all its economic, social disastrous effects and claiming over 1.7M lives (hoping for minimal loss of life from hereon), this pandemic has accelerated a positive trend towards further adoption of digital education around the world. As schools, colleges and universities were shut down (almost) worldwide since March 2020, all the stakeholders of the education sector (students, learners, parents, teachers, educators, governments) have had to scramble and perform circus acts to find substitutes for their century old habit of face-2-face education delivered in a largely physical environment. No other sector (than Education) has witnessed such a massive semi-permanent to permanent consumer behaviour change that the last 9 months of 2020 have brought at a global scale. Unfortunately while the haves somewhat moved on to new models of learning, the have nots (ones with lack of digital or device access) have further dropped down in the knowledge and education divide in both emerging as well as developed economies, repercussions of which humanity would feel for years to come.

As a response, new EdTech themed companies have proliferated across the world while the existing players increased their prominence in a very short period of time, sometimes ahead of ‘real value creation’, but then that’s the nature of capital markets. While the goal of this write-up is to articulate the EdTech opportunity set in India, it is only apt to compare the flow of capital in the 3 major markets (measured by metrics like size of learners, market size i.e. revenue $’s + profit pools, and capital flows). While India (high volumes, younger population) and US (high GDP/capita and ARPUs) have seen a similar investment interest ($2.2 — 2.5 Billion), China overtook by a huge margin with $6.2 Billion worth of investments in EdTech in 2020.