From valuations to value: Edtech’s shift towards sustainable growth
If 2022 brought turbulence, 2023 promised a rebound but faltered, and now, in 2024, the edtech industry tried to reclaim its footing. Resilience is the new mantra as edtech firms navigate challenges with cautious optimism, setting their sights on a brighter, more stable 2025.
The edtech sector, which experienced significant growth during the COVID-19 pandemic, witnessed further transformation in 2024. The sector’s hyper-growth mentality was largely fuelled by venture capital (VCs) firms, the allure of technology-driven disruption, and the rush to capitalise on the surge in demand driven by the pandemic.
However, in 2024, this hyper growth mentality began to shift. The industry moved away from its earlier obsession and began to place greater emphasis on efficiency, profitability, and delivering meaningful value—setting the stage for sustainable growth that’s built to last.
This shift reflects not just caution—but a sign of maturity. And yes, some investor nudging didn’t hurt either.
One can’t talk about valuations and investors without mentioning BYJU’S. Once the poster child of Indian edtech’s explosive growth, BYJU’S has seen its valuation plummet amid ongoing legal battles and bankruptcy-related proceedings. The company’s struggles have become a cautionary tale for the sector, with 2024 serving as a turning point for the wider edtech industry.
“We are honestly tired of hearing about BYJU’S,” an edtech founder, who didn’t want to be named, says, adding, “The BYJU story has already impacted the edtech sector; the industry, investors, and the ecosystem have largely moved on.”
Funding woes persist
While the edtech ecosystem strives to move forward, it continues to grapple with challenges like funding.
Vikram Gupta, Founder and Managing Partner of IvyCap Ventures, explains that the challenges facing the edtech sector this year were not only the result of internal struggles but also stemmed from entrepreneurs’ difficulties in raising capital, a situation largely triggered by the backlash surrounding BYJU’S.
“Investors stayed away from the sector, trying to understand what was really happening. In the process, entrepreneurs, who were in the middle of the growth, really suffered a lot,” Gupta adds.
Although funding in India’s edtech sector showed slight improvement in 2024 compared to the previous year, driven by large rounds from companies like Alakh Pandey-led PhysicsWallah (PW) and Ashwin Damera-led Eruditus, the overall funding levels remained significantly lower than the previous years.
But those large funding rounds, while positive, reflect more of a targeted recovery for specific players rather than a broad resurgence across the sector.
Gupta says investor confidence is “very cautious” regarding the broader opportunities in the edtech sector, and it will take time before investors start writing “bigger checks”.
He adds that this will also differentiate the type of investors in the sector. For example, “impact-oriented capital” might continue to flow in, while “high-return-oriented capital” might remain on the sidelines.
“The sector may start opening up opportunities in different ways in 2025, but I expect that to happen only in the second half of the year,” Gupta remarks.
Since entrepreneurs will face challenges raising the next rounds of funding, Gupta suggests they will need to be highly capital efficient, regardless of the business models they pursue. If their “survival” depends on securing the next round of capital, that will pose a significant issue.
The edtech entrepreneurs “have to have profitable business models”—this will be the “key in this space”, he emphasises.
Design: Nihar Apte
A new chapter
The days of reckless spending and unchecked ambition are fading in this new edtech chapter—though a few outliers remain.
Edtechs have pivoted toward building resilient businesses, prioritising disciplined financial management and thoughtful scaling. With investors demanding not just promises but proven pathways to profitability, startups are reimagining their strategies, crafting sustainable foundations for the future.
“This year, the industry moved beyond surface-level adjustments and embraced a holistic approach to enhance operational efficiency while staying true to its mission of creating long-term value,” says Krishna Kumar, Founder and CEO of Simplilearn.
Kumar adds that one of the most important learnings for edtech companies this year has been the realisation that education is not a short-term venture but a sustained commitment.
Shantanu Rooj, Founder and CEO of TeamLease Edtech, highlights that this year, the edtech industry matured significantly, driven by a shift in focus from “vanity metrics” like user engagement and downloads, to real financial metrics and sustainable growth.
While top-line growth has slowed for edtech companies and is expected to remain moderate in FY25, players like Eruditus, PhysicsWallah (PW), upGrad, LEAD Group, and Simplilearn are focusing on achieving EBITDA profitability or breaking even. Some have even seen early signs of success in certain quarters.
For one name on that list—PW—it will mark a return to profitability. The firm, once celebrated as the only profitable edtech unicorn, slipped into the red in FY24 and FY23 (after revised figures), fuelled by a sharp rise in expenditures.
AI the disruptor
While most companies are reining in their spending, one area where investments flow freely is artificial intelligence (AI). In particular, Generative AI (GenAI) has emerged as a game-changer in education, with the potential to revolutionise how students learn and edtechs function. AI also brings the promise of reducing costs.
Simplilearn’s Kumar highlights GenAI as a major disruptor in education, with its growing adoption across edtech companies, enabling more personalised learning experiences that will remain a key focus moving forward.
“As AI becomes more integrated, using GenAI will no longer be just a competitive advantage—it will be a necessity. Companies that don’t adopt AI will struggle to compete,” he emphasises.
This trend signals a future where AI-driven tools will be indispensable, not just in traditional education but in corporate training, upskilling, and lifelong learning.
“The growing use of AI and data analytics has enabled educators to better align content with the evolving needs of learners and employers, making skilling more targeted and impactful,” remarks Mayank Kumar, Co-founder of upGrad.
Hybrid model continues
While AI is making strides in solving educational challenges, the real test for edtech companies lies in their ability to continually innovate in ways to meet learners’ evolving needs while also driving engagement and retention.
For the last bit, the offline channel—the second frontier for edtech firms and the first, traditional frontier for education companies, especially in the K-12 and test-prep segments—comes into play. Edtech companies are expanding their offline presence through centres and touchpoints, moving beyond the online space to offer more personalised, face-to-face learning experiences, and build stronger community engagement.
Simplilearn’s Kumar points out that a continued focus on hybrid learning, blending online and offline elements to provide a more flexible learning experience, will remain a key strategy going forward.
He notes that while offline learning will continue to be crucial in areas like test prep, hybrid models are expected to become the standard across many segments.
Edtech players like PhysicsWallah and Unacademy have made significant investments in expanding their offline presence in the recent years, and continue to do so.
While the offline channel is growing rapidly for PW, its online segment still accounts for more than half of the revenue, with a 55:45 split between online and offline.
Meanwhile, Unacademy Co-founder and CEO Gaurav Munjal recently highlighted that the company’s offline centre business grew by 30%, while the online test prep segment saw a decline, though both channels showed substantial improvements in unit economics.
TeamLease Edtech’s Rooj believes that the future will embrace multiple formats—online, offline, blended, on-the-job, and peer learning—each offering unique strengths.
Design: Nihar Apte
Mergers & acquisitions
As companies navigate the challenge of finding the right business model amid tighter investor funding, not all will have the financial resources to endure for the long haul. This paves the way for mergers, acquisitions, and consolidations.
Gupta says that some companies, which struggled to raise capital in 2023 and 2024, are still facing difficulties. They may have pivoted to different business models, but many are likely to get acqui-hired in the future, while others may offer themselves for mergers and acquisitions, potentially at discounted valuations, he adds.
“There are a few startups that are already profitable. Some of these startups could have secured funding in a better market if the BYJU’S situation hadn’t occurred. It’s truly unfortunate for capable entrepreneurs with strong business models whose funding prospects were impacted,” Gupta explains.
Simplilearn’s Kumar, who expects increased consolidation in 2025, particularly in the form of acquisitions, believes that as consolidation gains momentum, it will create more investment opportunities, making the sector increasingly attractive to investors.
He adds that Simplilearn is also actively exploring acquisitions to strengthen its portfolio and bridge any existing gaps.
TeamLease Edtech’s Rooj anticipates a wave of small to mid-sized M&A deals, with larger, established players acquiring smaller companies. He elaborates that the activity will likely centre on firms specialising in niche areas such as AI-powered learning platforms, employability solutions, and industry-specific upskilling programmes.
However, M&As in the edtech sector often come with downsides, particularly layoffs. These are driven by efforts to streamline operations, reduce redundancies, and cut costs. Over the past few years, several startups, including unicorns, have resorted to significant workforce reductions as part of broader cost-cutting measures while grappling with losses.
Even this year, the sector saw layoffs, including from some of the big names like Unacademy, which cut at least 250 jobs.
Rooj believes that as the industry matures, layoffs will decline, giving way to new job opportunities.
“As companies focus on growth opportunities, we anticipate a rise in hiring across the sector, leading to net job additions in edtech in 2025 as companies look to capitalise on new industry prospects,” remarks Kumar.
What’s next?
upGrad’s Kumar says that while scaling access to quality education remains a challenge, the focus on outcomes will become even more critical in the education sector in 2025.
He adds that internship-driven education will take center stage, providing learners with the hands-on experience necessary to thrive in a competitive job market.
Supported by initiatives such as the Government of India’s internship and skilling programmes, the collaboration between edtech companies, educational institutions, and corporates is growing to ensure that learning remains relevant and practical, explains Kumar.
(Cover image and infographics designed by Nihar Apte)
Edited by Megha Reddy