One of the struggling sectors in India, not all seems to be well for the ed-tech companies. Investments in the sector declined 89% to $0.277 billion between January-December (till date) from $2.5 billion in CY22, revealed data from Tracxn, a start-up data platform. Interestingly, when compared with investment in CY21, when the industry received a total funding of $4.1 billion, it had been a downward slope. Nonetheless, experts remain optimistic that the sector will bounce back in no time. “With about 250 million students in the country and the associated large opportunity, it is just a matter of time before the ed-tech sector bounces back and we see unicorns in this space. The past couple of years made us all look deep into business models and valuations. I am sure, there are many entrepreneurs in India who are working on sharper models for the masses, which will gain investor acceptance in the near future,” Sreedhar Prasad, startup advisor and former partner, KPMG, told FE Education.
Furthermore, the number of rounds too declined 2.5x to just 61 in this year, till date from 223 during the same period in the corresponding year. Needless to say, the trend in the number of rounds too has been downwards. In CY21, the total number of rounds stood at 343. Industry experts opined that much of the growth was fueled by the pandemic which put the spotlight on digital learning, but post the pandemic, the industry lost its value proposition.”The funding in 2021 was high due to the rapid growth of tech companies during the Covid-19 in 2022 and 2023. However, this momentum has dwindled in 2023 as people now prefer in-person education models over purely digital ones. Consequently, funding has seen a decline in ed-tech companies. This is one of the reasons for declining investments,” Piyush Bhartiya, founder, AdmitKard, explained.
The Indian ed-tech market clocked total revenue worth $4.3 billion in 2022, representing a compound annual growth rate (CAGR) of 16.8% between 2017 and 2022, as per data from market research firm, GlobalData. The report further stated that last year pre-K-12 and K-12 segments accounted for a large portion of the revenue at 44.3%, that is, $1.9 billion. Meanwhile, another report from market research firm Statista suggests that the ed-tech industry which was valued at over $2.8 billion in 2020 is expected to cross the mark of $10 billion by 2025. Not to mention, the funding scenario has changed with limited mature rounds including Series, B,C,D,E,F among others, as Seed and Angel’s funding has found its way. “Investors are now more discerning, focusing on ventures with strong fundamentals. The reduction in funding rounds indicates a cautious approach, with investors prioritising scalability and long-term viability,” Akshay Chaturvedi, founder and CEO, Leverage.biz, said.