Edtech hits hockey stick curve in 2020 with record users, more funding deals, consolidation
In business and finance, the proverbial 'hockey stick curve' is used to describe sudden dramatic activity — in sales, profits, EBIDTA, etc. — after a relatively flat period.
The edtech sector globally hit the hockey stick curve in the pandemic. COVID-19 has served as an inflexion point for Indian edtech startups too. In fact, the industry reckons that the pandemic has been to edtech what demonetisation was to fintech in 2016.
Several startups, which earlier struggled to attract consumers due to either high pricing or low awareness, recorded robust growth in new users, traffic, engagement, renewal, and course completion rates.
In H1 2020, edtech was India’s second-most funded sector after fintech and financial services, according to YourStory Research.
Over $714 million in funding was raised by edtech startups across 46 deals compared to just $158 million across 20 deals in H1 2019. The 4.5X growth over the year-ago period was a result of rising demand for e-learning and online education triggered by the pandemic-induced lockdowns.
Top deals in the sector includedraising $200 million from Tiger Global, followed by another $200 million fund infusion from General Atlantic, and a $100 million investment by Mary Meeker’s BOND Capital — its first investment in India.
Other major deals in the sector involved, which raised $110 million in a Series E round from Facebook, General Atlantic, Sequoia Capital India, Nexus Venture Partners, Steadview Capital, Blume Ventures, ’s Kalyan Krishnamurthy, and ’s Sujeet Kumar.
It pegged the startup’s valuation at $510 million, lending it the ‘soonicorn’ status.
raised a Series C round in three tranches: $24 million from GGV Capital, followed by $12.56 million from Legend Capital and Omidyar's Ohana Holding; and $6.8 million from KB Global.
Vedantu also invested $2 million in a Pre-Series A round in Instasolv.
Other top edtech deals in H1 2020
- raised $15 million in a Series A round from Tencent, Omidyar Network India, AET, Sequoia Capital India, and Curefit’s Ankit Nagori.
- InterviewBit raised $20 million in a Series A round from Sequoia Capital India, Tiger Global, and Global Founders Capital. Reliance-owned Embibe raised $12.6 million, followed by $66 million, from the parent company.
- WhiteHat Jr raised $10 million in Series A funding led by existing investors Nexus Venture Partners and Omidyar Network India.
- raised $2.5 million in a Pre-Series A round from Blume Ventures, Sequoia Capital India, Kunal Shah, Alvin Tse, and Eric Kwan, followed by $9 million in a Series A round from RTP Global.
- raised $8.34 million in a Series B round from Iron Pillar, Matrix Partners India, Better Capital, AngelList India, and Reliance Jio’s Vikas Choudhury.
- raised a Series B round in two tranches: $3 million from Alex Samwer’s Picus Capital, Paytm’s Madhur Deora, followed by $7.5 million from BAce Capital, along with participation from existing investors.
- Toddle raised undisclosed Pre-Series A funding from Matrix Partners India, Better Capital, and Rahul Jaimini.
As per YourStory Research, edtech startups accounted for 17.2 percent of all VC investments in H1 2020.
Key trends in the sector
Edtech activity in H1 2020 has also thrown up some key trends that are likely to define the sector in the short-to-medium-term.
Penetration into Bharat
To make the most of this widening demographic spread, market leader BYJU’S has announced that it would spend the next few months developing learning modules in regional languages. The startup already counts 65 percent of its users from non-metro cities.
Also, to build brand awareness among users, startups are spending more on marketing activities. There has been a 128 percent growth in digital ad spends by edtech apps during the lockdown, as per a BARC-Nielsen report.
H1 2020 has been one of the busiest periods when it comes to M&A activity in edtech. As competition intensifies and user demand peaks, several smaller startups are getting acquired by the bigger players — a trend expected to continue in H2 2020 as well.
As several years of growth and innovation shrink due to the pandemic-led thirst for online learning, startups are increasingly tilting towards ‘buy’ in the perennial build-versus-buy debate.
The top acquisitions in H1 2020 were done by Facebook-backed Unacademy, which acquired exam preparation platform Kreatryx in an undisclosed cash-and-stock deal; non-profit coding platform CodeChef; and medical entrance preparation startup PrepLadder (the deal was completed in July).
Even BYJU’S is reportedly in talks with WhiteHat Jr for a $300 million acquisition. Both startups count Silicon Valley-based Owl Ventures, an education-focused investment firm, and China’s Tencent Holdings as common investors.
BYJU’S is also said to be in late-stage talks with Sequoia Surge startup Doubtnut for a $125-million acquisition.
Following the lockdown-led surge in edtech, even non-edtech players are entering the segment. In June, telecom major Bharti Airtel acquired a 10 percent stake in kids learning platform Lattu Kids through the Airtel Startup Accelerator Programme.
Further, Blackstone-backed test coaching institute Aakash Educational acquired a majority stake in Delhi-based K-12 platform Meritnation for Rs 50 crore.
Skilling platformhas also announced that it has earmarked Rs 50 crore to acquire two to three edtech firms in the current fiscal.
Edtech might be one of the few sectors that is creating jobs through the pandemic. Startups in the sector are compelled to fill up new roles to manage the current surge. BYJU’S is looking to hire 4,000 people in the next six months in business development, content, and tech roles.
Other edtech startups, which have job openings, include Unacademy,, , , , and .
Blended learning formats
As soon as India went into a lockdown, several e-learning platforms, including BYJU’S, Vedantu, Unacademy, Toppr, and others, rolled out ‘live classes’ which replicates the periodic curriculum of schools, and ensures that students learn without any disruption.
Most startups, in fact, made these live classes a free, synchronous offering to complement the on-demand, pre-recorded content, which is a part of the subscription packages. Live classes are open to all and have been instrumental in pushing user growth across the sector.
BYJU’S believes that the innovations edtech has seen during the pandemic aren’t short-term. “Some things will stay on the other side of the crisis too. We are likely to see a blended format of learning, which combines the best of both worlds — online and offline,” Founder and CEO Byju Raveendran told YourStory recently.
Already, edtech startups are adopting a data-driven approach to product and content, using AI-led personalisation, adaptive learning, gamification, and immersive technologies to engage users.
Uptick of skilling courses
With daily life slowing down significantly in the pandemic, several people now have more hours than they can kill. Many of them are investing that time in upskilling themselves through online courses.
There’s been a significant uptick in free courses on top skilling platforms like, Coursera, upGrad, and others. ‘Online free courses’ is the top-searched term on skilling sites, according to SimilarWeb (website data tracker).
Other popular search terms are ‘python courses’, ‘digital marketing’, ‘data science’, and ‘machine learning’.
Outlook for the sector
VC investment in edtech is expected to remain robust in the long-term.
Global edtech expenditure is projected to grow more than 12 percent CAGR to touch $342 billion by 2025, according to Barclays Research.
Much of this growth will be driven by Asia, where a broader socio-economic need stands to intersect rapid innovation in teaching and learning methods.
In a report titled Education Technology: Out with the Old School, Barclays stated,
“The unprecedented events have put education technology in the spotlight like never before. Educational institutions have closed in 107 countries, affecting more than 860 million students and counting. The edtech sector has leapt to a prominent position, making it of particular interest to investors as it reshapes how we learn in real time. We expect to see governments around the world taking a more favourable view of online learning as a result of the disruption to standard education delivery caused by the COVID-19 pandemic.”
Further, UNESCO estimates that improved access to quality education can increase a country’s GDP per capita by 23 percent in the next 40 years. It will also help power — what is being dubbed as — the “fourth industrial revolution” across the globe.
India, with its enormously large young population, is only getting started.
To sum up in the words of Unacademy Co-founder and CEO Gaurav Munjal, "The biggest consumer internet company in India will not be an ecommerce company, but an education company.”
Edited by Tenzin Pema