Outlook 2021: What happened in ecommerce in 2012 is happening in edtech now, says Pankaj Makkar of Bertelsmann India Investments
The COVID-19 pandemic accelerated the growth of India’s edtech sector and the National Education Policy is expected to give it a further fillip.
A report by RedSeer and Omidyar Network India said online education offerings for Classes 1 to 12 are projected to increase 6.3 times by 2022, creating a $1.7 billion market. Other offerings, including test prep, skill building, hobby learning, and STEM, are also seeing a growth spurt.
In a recent interview with YourStory, Pankaj Makkar, Managing Director of Bertelsmann India Investments, shed light on the massification of education enabled by edtech players.
“About five to years ago, we saw the first mega trend: massification of education. Today, by virtue of online, I think massification of education will keep getting accelerated for the next four to five years. Significant production and distribution of online education comes in, with students and teachers adopting these courses at a large scale,” Pankaj said.
As a venture capital firm, Bertelsmann has always been bullish on India’s edtech sector. It has two major investments in edtech: SaaS-based online education platform WizIQ and global executive education platform Eruditus.
Globally, Bertelsmann group has initiatives such as Education Technology Fund in Brazil and a global education initiative in partnership with Udacity among others.
Trends driving edtech growth in India so far
As Pankaj indicated, apart from massification of education, the last five to seven years revealed another mega trend: the entry of international investors, players, and institutes tapping the education market in India.
Pankaj called this a “West-meets-East trend”, stating that the western world has been known for its quality education and tech-enabled institutions, which have, over time, tapped into the eastern markets of China, India, Middle East, and Southeast Asia.
“We took a bet on this big theme in a company called Eruditus and it has shaped very well. It's actually taking care of both massification of education and the West-meets-East trend in a very big way. We are quite happy about how this thesis is playing out,” he added.
Most analysts believe that the COVID-19 pandemic gave edtech a much-needed push, much like what demonetisation did for fintech or deeper penetration of the internet did for ecommerce.
Pankaj spoke about how the edtech sector had grown and was finding its position gradually in the Indian ecosystem. He compared what's happening in edtech now to what happened in ecommerce between 2012 and 2014, when “every other company was an ecommerce company”.
“Now, some of them (startups) will succeed, some will fail. It happens in every sector, and it's happening in edtech now. The companies that succeed will end up building much larger businesses.”
In 2021, the goal of Bertelsmann India Investments will be to find companies (in edtech) that don't shut down, but continue to grow businesses and become dominant forces within their sub-sectors.
Key edtech trends that will play out in 2021
While massification and the West-meets-East trend will continue, Pankaj said four more trends would play a key role in opening up desired opportunities for the edtech ecosystem in 2021.
Further privatisation of education
Pankaj said till a certain point, education was part of public good - relatively free as offered by the government with less focus on quality. To improve this, privatisation came into the picture to a certain extent, but was yet to achieve its full potential.
“It is quite slow, but will happen. As this happens, more private enterprises will come in, bringing in more efficiency, innovation, and customer focus. The quality of education will fundamentally rise. I think this will be a very big theme for us,” he said.
Increased focus on distribution and content
Edtech players will continue to focus on distribution for the next two to three years. That will lead to a lot more content and innovation, followed by personalised learning. This will initiate the next wave of companies that will sit on top of this distribution chain.
“The government will eventually open up educational sectors and more opportunities will come up. Watch out for those bad sectors as and when regulatory changes happen. I think those are exciting things that we are looking at in education going forward,” Pankaj said.
Rise in demand for enablers
Providers are companies that build their own education products and sell it to consumers such as BYJUs. Enablers are companies such as Eruditus, which work with higher educational institutes and enable them to go online. Amidst increased adoption of technology and online learning, the time seems right for enablers to grow.
“Very deep capability partners are ready to work with them and build large businesses. We will see significant emergence of enabler businesses, startups which want to innovate businesses. This is the time for enablement; not just providing a business,” Pankaj said.
Blended learning will continue
With the debate around online vs offline gaining heat, Pankaj said the Indian ecosystem will adopt a more blended approach. This is important since strong interaction of students - from a social skills perspective - cannot happen online, at least as of now.
“We are also seeing that in the West, where online took off, education is moving towards a blended approach, as far as higher education goes. We like blended as a trend and think it’s here to stay,” Pankaj said.
Edited by Teja Lele Desai