Edtech startup Gradeup’s clientele comprises 1pc of India’s population. Here’s how they did it
L to R: Shobhit Bhatnagar, Sanjeev Kumar, Vibhu Bhushan, Co-founders, Gradeup
When Odisha-based Shashank Shekhar decided to prepare for the Indian Engineering Service (IES) exam in late 2016, he needed a community where he could ask and clarify doubts. The MTech graduate from IIT-Kharagpur did not opt for any coaching classes; instead, he chose to seek help in the online world. He hit the jackpot with Gradeup, an online education platform that focuses on test preparations, and soon realised the importance of short duration quizzes, and tests.
“Even in office, whenever I had 10 minutes to spare, I would solve one test. The environment Gradeup provided, where everyone was talking about exams/questions, was the best motivation for me. Also, the app is devoid of distractions as it is ad-free,” he says.
At the time, the app had 12 lakh app downloads, and over one lakh active users. Shashank wrote the exam in 2018, and went on to be the IES (AIR1 Electronics and Communication) topper of the year.
Meanwhile, Gradeup grew into a community of 13 million users and 25 lakh monthly active users (MAU), which it claims is the highest for an online education platform now.
Shobhit Bhatnagar, IIM-C alumnus and Co-founder of Gradeup, says their current user base is practically one percent of India’s population (1.3 billion). “The success rate for competitive exams is between one and three percent on an average. We have seen that those who prepare with Gradeup generally have a success rate that is 2-3X greater than the average, and we hope to take this higher,” he adds.
The Noida-based startup, which was launched in 2015, was the second attempt in starting up for Shobhit and his co-founders Vibhu Bhushan (34) and Sanjeev Kumar (29). Shobhit, now 32, was earlier a consultant at EY, and takes care of marketing and community development at Gradeup. Vibhu, also an engineer with over 13 years of experience across companies including Yahoo, and Infoedge, takes care of product and operations. With over seven years of experience in mobile and backend technologies (he was associated with Infosys as System Engineer), Sanjeev takes care of technology.
In 2013, the trio launched edtech startup GradeStack to create mobile-friendly exams with interactive content for students preparing for competitive examinations. Although the company managed to raise funding and got over half a million downloads in one year, it could not grow.
Two years later, in October 2015, the trio launched Gradeup, with GradeStack as parent company. The same year, Gradeup raised $7.5 million in Series A round of funding from the investment arm of Times Internet.
Gradeup is a mobile-based community for students preparing for examinations like IBPS PO, SBI PO, SBI Clerk, etc. with a 15-member content team that build seed content. The platform also serves aspirants of JEE, NEET, GATE, SSC, banking, railways, teaching, UPSC, defence, and state-level exams.
Key features include daily tests, interactive polls for practice, live sessions, and exam-related queries answered in real time. Gradeup also expanded its presence with app, website, and three YouTube channels.
“We believe that people prepare better when they prepare together; by questioning, helping, and challenging each other. Hence, at the very core of Gradeup is a community of students and expert mentors,” Shobhit says.
The startup has a team of 150 people across content (50), product (20), sales and marketing (30), and tech (20).
Experts to handhold
The first step for an edtech platform is to ask their target audience directly: what content are they looking for? Gradeup uses these interactions to find their strengths and weaknesses.
“We shape courses based on data collected from each student. Our mentors support them through the whole preparation process,” Shobhit says. Gradeup’s teachers are experts in exam preparations, and include retired professors from IITs, who are either part-time or full-time employees. Some teams have experts with 3-5 years’ experience too.
Classes last for an hour, and payments vary from Rs 3,000 to Rs 20,000, depending on the length of the customised programme. Students can post doubts if any, and get a teacher to respond on chat. The teacher-student ratio is 50:1 and most questions are answered in 30 minutes.
However, he adds that about 95 percent doubt solving happens peer to peer, despite teachers being available. “There are multiple levels of checks to see the quality of your peers’ answers with tech and manual intervention. Our mentors address flagged questions,” Shobhit says.
Gradeup also lets users analyse their performance and compare their rank against lakhs of other aspirants.
Anyone preparing for competitive exams has access to the abundance of material on Gradeup to practise and prepare for their exam. Users can also avail the platform’s premium offerings including the Test series, and Classroom (live courses).
The former allows a student to revise concepts and be exam-ready through real-time topic tests and mock tests, whereas the latter offers a complete comprehensive preparation course for a specific exam through live classes, quizzes, mock tests etc. (it has 50-100 students in the live chat room). These fixed models offer doubt resolution, practice questions, and specific doubt-solving sessions.
Gradeup's user-base is spread across aspirants for various exams.
The Test Series programmes cost between Rs 100 and Rs 1,500, and the average ticket size is Rs 300. For the Classroom sessions, the starting price is Rs 1,500, and goes up to around Rs 25,000, with an average ticket size of Rs 5,000. Gradeup makes a margin of 70 percent on Test series and 50 percent on the Classroom model.
Shobhit claims that paid services have seen 500 percent annual growth in the last fiscal. “But our current focus is on growth, not profit. We want to reach 30-40 percent of India’s 200 million students,” he adds.
Students, especially those in Class XI and XII, and those preparing for medical entrance exams, are Gradeup’s core target. Their initial strategy was to reach out directly to students through digital marketing via social media and YouTube ads. But Shobhit asserts that word of mouth has also helped a lot.
The team communicated with parents as well to instil confidence. “Getting parents to be a part of the journey was essential for decision making. With students’ better experience and improvement in learning, we showed them that Gradeup was a better alternative than tutors,” Shobhit says.
Gradeup follows the live learning approach as it is a big opportunity rather than recorded videos like on edtech startup unicorn BYJU’s. Shobhit says this strategy was devised as per the needs of aspirants.
“Learning via recorded content does not facilitate a continuous learning environment for students. With live online classes, students have access to a virtual classroom environment with instant teacher-student interaction. They can clear their doubts, or take tests and benchmark themselves against their peers,” Shobhit says.
He adds that live classes have been proven to be more effective in driving student activity, with 4x higher engagement compared to recorded videos and lectures.
Reaching out beyond metros
Aspirants from Tier II and III cities, which lack quality coaching institutes, are also a major customer base for Gradeup. The top cities include Patna, Lucknow, Pune, Indore, Jaipur, Agra, and Kanpur.
Shobhit elaborates. “Every year more than 25 lakh students appear for JEE and NEET entrance exams. However, only 15-25 percent of the student population in this segment can actually afford the cost of coaching. With a presence in over 2,500 cities, the geographical reach of Gradeup helps aspirants achieve their goal for effective exam preparation with both accessibility and affordability.”
Offline branding has built efficiency across cities for Gradeup. Shobhit states that the RoI (return of investment) is higher this way, and it is more scalable.
An initiative that worked well for Gradeup beyond the Tier I markets was the “Champions” programme, through which they build “champions” in regions, with ambassador for Tier II and III cities. Shobhit explains, “This localised approach is about picking top 20 students, finding out what advantages they find on our platform, and what they want from us. These brand ambassadors go out and influence others. In three months, Agra’s user base grew by 1,500 percent, thanks to this initiative.”
India’s promising market
As an emerging superpower, India places great importance on education, and has more mobile devices now than ever before. According to the Ministry of Commerce and Industry, India’s education sector was worth $91.7 billion in FY18, making it the second largest market for e-learning after the US. The e-learning sector in India is expected to reach $1.96 billion by 2021.
According to market research firm Technavio, the test preparation market in India is growing at a CAGR of close to 16 percent between 2018 and 2022. “There is a high demand for government services and bank probationary officer (PO) courses as these jobs provide job security and well-paid salaries. The popularity of online test preparation in India is increasing as many students, and working professionals in Tier I and II cities are opting test preparation courses for Bank PO exams, and government services,” the Technavio report says.
Startups like Unacademy, Bankersadda, Testbook, and Vedantu are all operating in the online test preparation market. However, according to research by RedSeer Management Consulting, given the availability of free content, edtech platforms are grappling with monetisation.
An estimated 80 percent of new users added to the pool every quarter continues to be free users who prefer unpaid/trial packages (across platforms) or using free applications like YouTube; only 20 percent of users added every quarter use paid services.
RedSeer research also indicates that the online supplemental education is a $65 million market largely dominated by Class 6-10 courses. It has found that students usually try free versions for 6-7 months before taking annual paid versions. The percentage contribution of competitive courses is highest in the JFM quarter (January to March) as a huge number of student take short crash courses for competitive exams.
At present, the Gradeup app has four lakh daily active users, and 20 lakh monthly active users. The platform has sold over six lakh packs in the Test series so far. Annually the platform sees more than two lakh transactions and 2.5x growth in user base.
“Our revenue is also doubling now. For FY 2020, we are targeting five million active users, with 10 percent of them paid users, as well as 3x growth in revenue compared to FY19,” Shobhit added. Gradeup claims to have 155 million question attempts per month.
Many players exist in Indian edtech industry now, across three-four verticals. In each category, winner takes all, depending on content, users, data etc. Shobhit believes that India can have 50-60 million edtech users in two years, like China.
“At the moment, our expansion is all about increasing our reach. We are not actively looking for funding now; we may do so after six months. Our ultimate aim is to have students tell us that we helped them achieve their goals,” he adds.