Edtech 2020: Funding surge, WhiteHat Jr-led coding growth, new unicorns, M&As, and more

“There are decades where nothing happens, and there are weeks when decades happen.” – Vladimir Ilyich Lenin

Nothing describes the state of edtech in 2020 more presciently than this Lenin quote, which was frequently shared in the initial months of the pandemic. 

As the coronavirus outbreak shut schools, colleges, and other academic institutions globally, education was faced with its biggest crisis ever — the crisis of continuity.

UNESCO estimates that by March-end, 80 percent of the world’s student population was impacted by school closures, forcing them to flock online to avoid interruptions in learning.

In India, approximately 260 million students, a majority of them in the K-12 segment, were affected by the lockdown. As a result, migration to online platforms took place at a breakneck speed.

From school curriculum, coaching centres and 1:1 private tuition classes to vocational education, supplementary and upskilling courses — everything moved online, and ‘edtech’ became the buzzword.

Some indicative stats — between April and December 2020, ‘edtech’ searches gained 60 percent on the Indian internet, as per Google Trends. Searches for individual companies like BYJU'S, Vedantu, Toppr, and so on, gained even more.

The frenzied activity on the consumer side was matched on the business side too. 

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Edtech was one of the top-three funded sectors in terms of deal volume (84) in 2020. In terms of capital raised, edtech startups came out on top, with a whopping $1.8 billion, according to YourStory Research. (Fintech was the second at $1.58 billion)

KPMG estimates that there are more than 3,500 edtech startups in India today. Further, the Ministry of Human Resource Development projects that the country’s edtech expenditure would reach $10 trillion by 2030.

Several startups, which earlier struggled to attract users due to high pricing or low awareness, recorded robust growth in traffic, engagement, subscriptions, renewals, and course completion rates. The scepticism around e-learning also reduced sharply, and even fence-sitters jumped onto the edtech bandwagon.

As schools and coaching centres moved from conventional curriculums to online learning, they turned to B2B startups building learning management systems that would take all aspects of education — classes, practice tests, assignments, exams, schedules, communication, payments, etc. — digital.  

To put it in the words of bestselling author Yuval Noah Harari, “That is the nature of emergencies. They fast-forward historical processes. Decisions that in normal times could take years of deliberation are passed in a matter of hours.”

YourStory lists the top trends that encapsulate edtech’s eventful year. 

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Small-town adoption of e-learning

Following the lockdown in March, edtech startups saw rapid growth in users from outside the top eight cities. India’s largest edtech startup BYJU’S went on record to say that 65 percent of its users come from non-metro locations. 

A joint report by RedSeer Consulting and Omidyar Network found that on average, 70 percent of monthly active users on e-learning platforms hail from Tier-II towns or beyond.

This is only going to increase as digital helps improve education access at the grassroots where physical infrastructure is limited. 

Mahesh Pratapneni of Emerge Ventures, told YourStory earlier: “Edtech players in Tier-II and Tier-III cities are primarily acquiring clients through referrals, while edtech players in metros are doing it through blitzkrieg marketing using movie stars and celebrities.”

Other factors that contributed to this surge are the significantly lower costs of delivering education at scale via digital mediums, increasing smartphone and internet penetration in Bharat, and a huge untapped market in these areas.  

Not just in terms of user growth, but this trend was reflected in VC investments too, with edtech startups from Bhopal, Kochi, Surat, Chandigarh, Ahmedabad, Patna, and others securing funding in 2020, as per YourStory Research.

Saumya Yadav, Co-founder and CEO of Udayy, said at TechSparks 2020, “At this point in time, every single parent, child, teacher, principal in India has seen online education or been exposed to learning online. You can be anywhere in the country and still have access to high-quality education at a very affordable price.”

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Increased M&A activity 

The year 2020 saw more mergers and acquisitions (M&As) in edtech than ever before.

Late-stage companies and unicorns like BYJU’S and Unacademy adopted the grow-via-acquisition strategy and scooped up a bevy of younger startups. 

Unacademy, which saw a 4X surge in its valuation this year, made five acquisitions across segments: Kreatryx, CodeChef, PrepLadder, Mastree, and Coursavy. 

In September, BYJU’S, India’s second-most valuable unicorn, acquired immersive learning startup LabInApp for an undisclosed amount. 

Prior to that, in August, it paid a whopping $300 million to acquire 18-month-old coding startup WhiteHat Jr, bringing into focus a segment that kept the edtech sector buzzing for the rest of the year: coding for kids. 

In fact, WhiteHat Jr not only became 2020’s most-talked about edtech startup for a variety of reasons, but also spawned an industry of coding platforms for kids. 

BYJU’S was also reportedly in talks to buy Sequoia-backed Doubtnut, but the discussions fell through. Vedantu, meanwhile, acquired a partial stake in doubt-solving app Instasolv to ramp up its presence in Tier-III and IV towns.

Earlier today, LEAD School acquired AI-powered gamified student assessment startup QuizNext to improve teaching methods in schools.

Interestingly, the surge in online education is attracting even non-edtech players to the sector. In June, telco Bharti Airtel acquired a 10 percent stake in kids learning platform Lattu Kids through its accelerator programme. 

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Live coding mania

Industry experts reckon that coding is the next big frontier for edtech startups. This is because the other big segments — K-12, test prep, skilling — are almost saturated now.

Two events from the year triggered a widespread coding mania in the country. One was, of course, BYJU’S acquiring WhiteHat Jr; the second was the government's National Education Policy 2020.  

The new educational reforms mandated schools to initiate coding classes for students from Class 6 onwards to build analytical thinking at a young age. 

Suddenly, coding became the hottest segment in online education and a plethora of live coding startups gained prominence: Tekie, CodeYoung, Codingal, Coding Ninjas, Codevidhya, Dcoder, Tinker Coders, CodeMonkey, Camp K12, LeapLearner, Tinkerly, Masai School, among others. 

Coding for kids is estimated to be a $14 billion market in India already. Even generalist edtech players like Toppr, Vedantu, and others offer live coding classes now. 

Naman Mukund, Co-founder of Tekie, a startup which uses animation to teach coding, told YourStory recently, “Coding is an enabler for kids to excel in various verticals. Once the base is set, they can design apps, build websites, AR/VR products, and other things. Coding can help a child build next-gen skills.”

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Gamified and immersive learning 

On the heels of the lockdown-led surge in edtech, Byju Raveendran told YourStory that startups will start experimenting with varied “styles, sizes, and pace” of learning to customise their offerings for a widening demographic.

One of the formats gaining traction is gamification, which focuses on knowledge retention more than rote memorisation. Startups say that gamified learning is not only more fun, but also improves understanding of concepts, information retention, user engagement, and course completion rates. 

A bunch of startups like PlayShifu, Kutuki (one of the winners of the Aatmanirbhar Bharat App Innovation Challenge), ClassMonitor, Kiddopia, TinyTapps, Lattu Kids, Flintobox, etc., are gamifying learning for preschoolers, while others like Cuemath, PlayAblo, EduThrill, and even Toppr and BYJU’S have built interactive programmes for K-12 students or beyond. 

This year also saw the growing need for immersive learning experiences that, in the absence of physical spaces like labs and classrooms, can replicate a school-like environment online.

Advanced technologies like Augmented Reality, Virtual Reality, robotics, AI and ML are enabling startups to develop interactive and immersive learning programmes for students. 

BYJU’S acquisition of lab simulation startup LabInApp signalled the growing importance of this segment, which is likely to heat up in 2021.

Edtech globally will continue to be "in the spotlight" for the next few years, as per Barclays Research. Much of this growth will be driven by Asia, where a broader socio-economic need stands to intersect with rapid innovation in learning methods. 

India, with its enormously large student population, is only getting started. To conclude in the words of Unacademy Founder Gaurav Munjal, "The biggest consumer internet company in India will not be an ecommerce company, but an education company.”