In June 2021, BYJU’S raised money at a $16.5B valuation and became the most valuable EdTech company in the world. The startup is now in talks to raise at $21B. According to some sources, it may IPO in 2022 at a $50B market capitalization. Why is an Indian company valued so much greater than EdTech leaders from the US?
The real inflections in Indian Start up space happened with the rise of FlipKart in 2010 and the incredible adrenaline shot from Reliance-Jio in 2016. This current wave of innovation in India is a generational opportunity due to a perfect storm of catalysts.
Demographic Pyramid: 600 M people under 25, more than any other country
Robust Economic Growth: 8% Annual GDP growth by 2050
Increasing Internet Access: 500 M Active internet users growing at 14% Annually
Deep Talent Pool: India Produces 1 M engineers Annually
Distinct Education Culture: $135 B+ in annual education spend
Mature Startup Ecosystem: $10 B in annual VC funding
Today India is uniquely positioned for innovation, particularly in education technology. Relative to China and the US, India has stronger projected GDP and GDP per capita growth. In addition, India’s literacy rate is much lower at 74%. Most strikingly, India has a much younger population than both China and the US on a relative as well as absolute basis.
[30th Sept 2021, Mujtaba Wani, https://medium.com/].
Indian EdTech Startup Ecosystem – Sub Sectors in EdTech
Test Preparation
It is the evergreen category in India, thanks to the country's obsession with grades, admission to engineering courses and government jobs. Startups are helping Indian students ace almost any test out there, with the focus on IIT-JEE, CAT, UPSC, SAT and medical entrance tests.
Online Certification
For a long time, certificates have validated specific skill sets, and the trend is likely to continue. As a result, this segment has witnessed an unprecedented surge in terms of user adoption and partnership building with colleges and universities.
K-12 Learning
The K-12 segment offers online learning materials which supplement school curriculums. Targeting students up to Grade 12, these apps have seen the widest adoption in India. Skill Development: Skill advancement is essential in today’s world. Edtech startups are enabling faster skill development and further upskilling and reskilling gig economy workers and those in entry-level technology roles. Additionally, they are bringing engineers and software developers up to speed with the latest and most adopted technologies.
Enterprise Solution
This segment has witnessed maximum growth as companies are integrating such solutions to stay sustainable in a pandemic world. Traditional educational institutions are mostly reluctant to adopt new technologies, but now this has become a primary tool for trade.
Source: Inc42
The $10 Bn Edtech Opportunity By 2025
Convenience and cost efficiency are the two primary drivers of online education in India.
A National Sample Survey (NSS) on Household Social Consumption stated that there is a 26% surge in out of pocket expenditure on education between 2014 to 2018.
In the urban region, the course fee surged 47% from Rs 5,544 in 2014 to Rs 8,152 in 2018. This statistics involved an average of (2,000 or 20,000?) Indian students spread across pre-primary to college levels.
The income elasticity on education is estimated at 0.93 compared to 1.95 in healthcare. This indicates that at any income level, an Indian consumer will prefer investing more on education than healthcare.
India To Witness 3.7X Growth In Edtech Market Size In The Next Five Years
K-12 learning solution will account for 41% of the total edtech market size by 2025.
The market size of K-12 learning solutions is estimated to surge 3.5x by 2025.
11.3 Mn could be the total number of paid users in the K-12 learning solutions space by 2025.
Skill development is one of the most lucrative market opportunities in the K-12 space.
Coding and other STEM-related skills are currently witnessing a massive adoption.
The growth of Indian EdTech is going to surge with the increasing amounts of global venture entry from last 10 years. Smart investors like Sequoia, Accel, Lightspeed, and Tiger Global have been pouring money into the ecosystem. The EdTech leaders are massively capitalized: and have collectively raised over $5 billion in funding. BYJU’S, perhaps the world’s most important education company, raised $2 billion in the last two years. It was the first EdTech decacorn in the world.
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