The Indian edtech sector is showing early signs of a rebound following a sharp decline in funding post the pandemic boom, according to the latest report by market intelligence firm Tracxn. The sector, which ranks as the third highest-funded globally in terms of total investment to date, has witnessed $215 million in funding in 2024 year-to-date, showing a modest rebound from the $321 million secured in 2023. The 2023 figure marked an 87% drop from the $2.4 billion raised in 2022, reflecting the sector’s continued decline.
The current funding levels remain significantly below the sector’s peak in 2021 when it raised a staggering $4.1 billion. The first half of 2024, however, has shown promising growth with $164 million in funding, marking a substantial 96% increase compared to the $81.9 million raised in the second half of 2023.
Notable developments in the sector include Avanse Financial Services raising $120 million and the successful public listing of online learning platform Lawsikho. The report highlights top funded companies in the space, with Unacademy leading at a valuation of $3.44 billion, followed by Eruditus at $2.9 billion and upGrad at $1.86 billion.
The landscape now boasts six unicorns, positioning it as the second-highest globally after the United States. However, the sector has seen a decline in acquisitions, with only one recorded in 2024 so far, compared to 13 in 2023 and 26 in 2022.
Neha Singh, co-founder of Tracxn, commented on the sector’s resilience, stating, “It has shown remarkable adaptability in the face of changing market conditions. While the funding levels are still below the highs of 2021, the sector’s growth in 2024 so far indicates a renewed interest from investors, especially as companies transition back to traditional learning methods while incorporating digital innovations”.
The report also reveals that the majority of funding in recent years has been concentrated in late-stage rounds, with a peak in 2021 followed by a sharp decline in 2023. Early-stage investments have followed a similar pattern, while seed-stage funding has seen a significant drop, falling to $8.5 million in 2024 YTD from $156 million in 2022.
Despite the challenges, including a shift back to traditional learning methods and reduced demand for purely online courses, experts see potential for continued growth in the sector. This is particularly true for niche areas such as professional upskilling programmes and innovative online courses that address gaps in offline education.
Government’s initiatives, including partnerships with edtechs and the National Education Policy 2020, are expected to fuel future growth by promoting digital education and supporting public-private partnerships. As the sector evolves, a trend towards integrating offline and online education to meet changing needs is emerging, with key developments including the adoption of AI and voice technology in classrooms, the report said.