Ed Tech startups are back as favourites, draw US$ 197mn worth investment in 2016

Chennai: Ed tech are back in fashion this year, drawing PE/VC investments worth $197 million (across 21 deals) till end of August 2016 — almost 3 times compared to the $67 million in 2015 (17 investments). The sector is well on its way to surpass the highest ever figure reported of $235 million in 2012, according to data from Venture Intelligence, a research firm.

Within the sector, test preparation, vocational startups and certification firms were most favoured by investors. The $70 million attracted by Byjus in March 2016 led by Belgium-based Sofina marks the largest investment for a startup education company and takes the total funding raised by the company to almost $100 million.

PE investors have even returned to the regulated sectors with CX Partners investing as much as $60 million in Nspira, a group firm of the Hyderabad-based Narayana Group, while the Jain Group attracted $35 million by selling a 74% stake in its K-12 schools to Cerestra Edu Infra Fund.

Aarin Capital, the family office of Manipal Group's Dr.Ranjan Pai and former Infosys CFO Mohandas Pai, has been an active investor in the sector (5 investments in the last 18 months), and has also succeeded in getting strong follow-on funding for its early bets in the sector like Byjus and Tabtor. Among VC investors, firms like Kalaari Capital and seed funds like Blume Ventures have been specially focused on technology enabled companies in the sector. "Private equity interest may ebb and flow but most stakeholders believe deep down that education sector will change forever and technology companies will bring about the change. Early trends are that themes like personalisation, early learning, shcool and college enablement and language learning will witness the most innovation and thereby create the highest impact in how education is delivered, and consumed in the decades to come," said Sumit Jain, partner at Kalaari Capital.

Strategic investors also took interest in the sector. Text book publishing company S.Chand, which had raised $26 million led by IFC in 2016 has become an active strategic investor (backing 3 startups).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.