Edtech leads investments in education sector; US$ 1.1 bn poured in 2020

The education sector continues to be one of the leading sectors for investors amid coronavirus pandemic, with edtech leading an investment worth US$ 1.1 billion in 2020, the highest annually and four times higher compared to the last year. Investors stated that they will continue to see the maximum investment in 2020.

Digital education is the only solution to continue learning amid coronavirus pandemic as students across all ages are confined to home. Factors such as high penetration of low-cost internet (4G) in India has made accessibility to digital education possible. With parents confined to home, students can access learning material online through their parents’ phones.

According to Venture Intelligence data, between January 2020 and August 2020, venture capital (‘VC’ - defined as investments in companies less than ten years old) investors pumped in US$ 1.19 billion amount across 36 deals, against US$ 409 million across 43 deals between January 2019 and August 2019.

From January 2020 to September 2020, Byju Classes leads the sector with raised capital of ~US$ 1.12 billion in four branches from investors including Silver Lake, Tiger Global, General Atlantic, Owl Ventures and DST Global.

Education is the most important solution to alleviate poverty. India has a large English-speaking population with technology architecture that can make Indians to become global tutors. This can be like Indian IT industry outsourcing for low-cost course delivery and doubt-solving offerings for the global population.

Mr Vaibhav Tamrakar, Vice President of PGA Labs stated that low digital penetration of online education at 1% ceiling is high (US$ 100 billion market size). Large untapped opportunity. With nearly 260 million student enrolments (from 345 million relevant population), spending on education as a percentage of family income is high in India.

He also added that government is gradually reopening school for 9-12 classes to help the student clear doubts in rotational interactions with teachers. As the pandemic continues, the schools will continue to push online as a medium of instruction for primary and secondary levels.

EdTech may also jump from chalkboard to whiteboard directly, in areas like professional courses and higher education. The parent’s involvement in student education will increase with the work from home situation and constraints on travel and expenses. Thus, home-schooling as a concept also has potential for growth in India.

Government schools and colleges also modernising the traditional education system and will continue to do so even after physical classes resume post pandemic. Learning Management System (LMS) integration, digital exams, faster results will become the norm, making a potential ground for technology companies to maintain and develop the efficient systems in institutions across India and globally. Parents are increasingly adapting to digital tools and e-learning, which has boosted the penetration and demand for e-learning.

Mr Sandeep Singhal, MD and co-founder of Nexus Venture Partners stated that, private education is a huge sector and forms the backbone of aspirational India. The next generation online education platforms have increased access to cutting edge content, new learning methodologies and more cost-effective delivery. However, online education solutions have struggled with high costs of customer acquisition.

He added that even after schools reopen, supplemental and remedial learning will continue to grow online. New formats will emerge - AR/VR is making entry into educational content. Local language support is another area for growth. New teaching pedagogies are also emerging across subjects like math, language learning, interest-based learning, professional training programs, etc.

Large players in the space are - Byjus, Unacademy, Jio Embibe, Vedantu, Toppr. They have become popular brands and thereby lowered the CAC. These brands will continue to see the maximum investment in 2020. There has been a huge demand during Covid-19 period which has also helped customers adapt faster. Investors expect that the trend will continue as users get comfortable with digital learning.

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