Madan Padaki & Srikrishna Ramamoorthy
India has over 550 million people below the age of 25 years. Over 32 per cent of the 1.2-billion population is in the age group zero to 14, which means that the number of people in India who need primary and secondary education alone exceeds the entire US population of the US.
Given the predominantly young population and growing acclimatisation to technology, the education sector has witnessed stupendous growth in the last few years in India. This growth is driven by the increasing propensity of consumers to spend on education and more aggressive initiatives by entrepreneurs.
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Approximately 17 per cent of business plans that Unitus Seed Fund (USF) has received are from the education sector alone. The first half of 2015 saw a 13 per cent increase in the number of education startups, as compared to 2014. In particular, the ed-tech sector is seeing a large number of entrepreneurs. To put this in perspective, around USD 40 million was invested across five ed-tech startups just in the month of April 2015.
With greater internet and smartphone penetration, ed-tech entrepreneurs can more efficiently cater to cities with lower public education standards. Models and processes like gamification, simulation, and so on are also pushing innovation in this segment.
Unitus Seed Fund recently partnered with advisory firm Sylvant for the StartEdu competition. One of the goals of the StartEdu competition is to increase awareness of the availability of mentoring support and investing capital to education startup entrepreneurs across the nation. In conjunction with 12 Speed2Seed partners, the StartEdu competition (versions 1a and 1b) was promoted widely, which resulted in 106 applications - more than twice as expected!
From a geographical perspective, they came from: 50 per cent south, 25 per cent north, 18 per cent west, and 7 per cent east India. Not surprisingly, Bangalore was the leading city in the south with 26 applications, with Delhi/NCR close behind with 16 entrepreneurs. 65 per cent of applications were from companies already receiving revenue, with the balance at the pre-revenue or prototype stage. The most prevalent type of business was a marketplace (18 per cent), but we saw startup schools, higher education analysis tools, simulation software and many other types of businesses, as well.
LabInApp went on to win the competition in the revenue category (and subsequently received an investment of Rs 60 lakhs from USF). The winner of the second StartEdu competition was GetSetSorted, in the career counselling space.
What were our learnings from interacting with all of these startups? Let’s focus here on K-12 and look at how firms are differentiating themselves.
First, they differentiate through the targeted customer base. The customer base comprises students, teachers and administrators. There are multiple startups that are catering either individually to each type of customer, or have a variety of products that amalgamates their customer base (usually in order to have a more prominent USP). For instance, Vedantu is trying to build a marketplace targeting tutors as well as students and bring their interaction online. Flinnt is an app to improve student =-teacher interaction that sells to schools and other institutions. Not surprisingly, the most populated category focuses on the students and digitising both in-classroom and outside classroom educational needs.
Second, differentiation is in the intended disruption. For instance, tablet and mobile-based startups like Edutor transform the tablet PC into an educational device, which then enhances the learning experience. Cloud-based ERP Fedena provides user-friendly dashboards with login access for teachers, non-teaching staff, students, parents and management personnel of the target institution. Curiositi offers a customised programme involving learning kits that integrates with a school’s science curriculum and transforms science into activity-based learning.
Some of the other recent investments in this space include Simplilearn (USD 15 million), Vedantu (USD 5 million), Toppr (USD 10 million) and Embibe (USD 4 million). Flow of capital in the ed-tech sector has shown a clear upward trend, with consistent growth since 2010. While evaluating these startups, most of the investors look out for the potential of efficient scaling. Strong tech innovation has proven to be a key enabler for scaling businesses into successful enterprises across sectors. Hence a lot of edupreneurs are now experimenting with the tech aspect alone, a notch up here or a new twist there!
Besides tech-innovation and scalability, the aspect of customer acquisition also remains a huge challenge. The big question still posed: Are the schools motivated by these transformations? Will these tech propositions actually appeal to them, or will they still stick to their brick-and-mortar methods to attain the ultimate goal of educating students?
The education sector is indeed witnessing swift growth with greater adaptation of the digital platform. However, in the chase for introducing the best or the most exciting technology as a potential tool, it is critical that the founders stay focused on the underlying problem and not just on the technology itself! As Michael B. Horn and Heather Staker aptly point out in their book Blended: Using Disruptive Innovation to Improve Schools: “The most successful designers of education technology will keep the end in mind, rather than pushing tech innovations for technology's own sake.”