Why investors should bet on digital startups offering extracurricular activities

The devastation wrought by the COVID-19 pandemic and the subsequent lockdowns have altered the status quo of the startup investment space in multiple ways. With specific segments witnessing accelerated growth in both consumption and user base, investors have realised the need to shift their focus to startups that are not only relevant now but will also flourish in the post-COVID world.

One such sector is edtech.

According to Indian Private Equity and Venture Capital Association (IVCA) and PGA Labs data, Indian edtech startups raised a total investment of $2.22 billion in 2020, a significant jump from $553 million in 2019. While startups offering K12 courses and test preparation account for the largest funding share, companies providing extracurricular learning online are also garnering increased interest from startups.

The market for extracurricular activities (ECA), both offline and online, remains largely fragmented, is ripe for disruption, and has the scope for high revenue generation.

Bringing structure to India’s unorganised ECA space

The extracurricular activities space for children in India is a large market, but has conventionally been unorganised and hyperlocal. Parents are often unable to find high-quality ECA teachers locally in the stream of their choice. Consequently, children do not get to opt for their choice of ECA or ECA at all because either they can’t find the right teacher or the classes need them to travel long distances.

This is where online ECA platforms step in by facilitating access to high-quality, experienced teachers from a wide variety of disciplines. Children can conveniently learn from the safety and comfort of their homes without having to compromise on quality.

A child based in Delhi can take singing lessons from a music teacher in London or learn the basics of coding from an IT expert in Bengaluru.

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Catering to an entirely new, untapped audience

Online ECA startups, in addition to serving an existing market during the pandemic, have brought greater access to extracurricular learning to children who until recently didn’t participate because of the reasons stated above.

Moreover, nation-wide school closures have forced parents across India to upgrade the infrastructure at their homes; every mid/high-income household now has a better internet connection and separate computing devices for each child.

This has further accelerated the adoption of online ECA learning, with more children having the resources to engage in extracurricular activities online.

All these factors present a huge opportunity for ECA startups to ensure standardisation and quality of supply. Given that extracurricular learning transcends geographies and languages, startups can build a high-quality international brand around ECA. An experienced team,with a strong focus on pedagogy and child development, has the potential to build that kind of brand and unlock tremendous value for investors.

Changing parental attitudes to further drive market growth

Unlike previous generations, parents today realise that the lack of exposure to extracurricular activities can stunt the cognitive and emotional growth of children. They encourage their children to pursue interests outside academics and take part in various extracurricular activities, which range from singing and visual arts to dancing to coding.

This notable shift of attitude in how extracurricular learning is perceived by parents will certainly contribute to the growth of India’s ECA market, which is projected to reach $5.8 billion in 2021 and register an estimated 9.23 percent growth by 2025, according to a survey conducted byIIM Kozhikode.

Need for investment in online ECA platforms

ECA demands continuous, in-the-moment, real-time guidance from teachers, which is why the live model is more suited for this than recorded sessions that fail to deliver a personalised, engaging experience to learners.

From the technological perspective, startups must focus on incorporating AI, computer vision, and gamification to enhance the fun quotient. Additionally, the social nature of ECAs calls for the need of introducing group live classes wherein children can learn in teams, gain from live interaction, peer learning, and collaboration.

With close to 100 million children pursuing varied extracurricular activities in India alone, the extracurricular learning industry presents unbridled potential to emerge as a dark horse for startup investors.

Considering the possibility of COVID-19 restrictions being in place for the foreseeable future, it is safe to say that more children will prefer to participate inextracurricular activities digitally, thereby catapulting the growth of digital platforms offering ECA courses. The demand for such classes, however, is likely to be on the rise even after the pandemic on the back of convenience and comfort. 

The onset of the COVID 19 pandemic has underscored the positive impact of technology, especially on the lives of children. Developing indispensable skills and pursuing hobbies is easier than ever, thanks to the plethora of resources available over the internet.

As digital platforms for extracurricular activities take on the responsibility to facilitate this uninterrupted access, it is the right time for investors to put their bet on these new-age, tech-based startups, which are poised to become the next-generation, billion-dollar companies.