Edtech firms place big bets on upskilling, higher education
The Indian edtech industry is set to attract more investments for upskilling, higher education and test preparation, driven by strong demand despite facing a postpandemic funding downturn, investors and experts said.
This investment trend mirrors in a recent investment of $10 million by Blume Ventures in Upward & Onward’s maiden fundraising round. The company operates Interview Kickstart, a platform for upskilling powered by software and artificial intelligence. Other significant transactions include Upgrad’s $36.4 million fundraising through a rights issue in 2023, and Newton School’s $25 million funding round led by Steadview Capital.
Reddy, co-founder Blume Ventures, highlighted the lucrative business models of companies like Upgrad and Emeritus, which boast higher gross margins. There are more opportunities in higher education and skilling considering that they are “largely driven by jobs or income-orientation”.
Mujtaba Wani, principal at GSV Ventures, echoed similar sentiments, emphasizing the rising demand for upskilling and higher education driven by advancements in AI and a growing middle class. This trend is exemplified by companies like Emeritus, Physics Wallah, and Upgrad. “Each is growing and doing hundreds of millions in revenue with healthy unit economics.”
This optimism is in stark contrast to the challenges the sector encountered over the past year, including a severe funding crunch, resulting in layoffs and office closures.
In 2023, funding for higher edtech dropped to $198.1 million from $330.8 million a year ago. Similarly, investments in upskilling, or continued learning, fell to $92.1 million, down from $370.4 million. Funding for test prep also witnessed a dip, declining to $12.1 million from $1.2 billion during the period under consideration.
Besides, the failure of Byju’s, once the most valued edtech startup in Inda, contributed to more caution among investors and a more discerning investment approach for the sector.
While investors are actively looking at sectors like upskilling, test-prep and certificatebased platforms, they are more cautious about investments in the sector following the Byju’s episode, said Vivek Mehta, partner at executive search and talent advisory, ABC Consultants.
The sector may see more consolidation as continued investor scepticism will push only the strong ones with a clear business model to survive, Mehta added.
Reddy also emphasized the need for sustainable market models to restore confidence of investors in edtech’s potenKarthik tial for growth.
Despite these obstacles, the industry remains primed for growth, with a preference for digital-first learning among learners. The integration of artificial intelligence into education promises personalized learning experiences, optimizing costs and efficiency, said Ujjwal Singh, chief executive officer of Infinity Learn.
Akshay Munjal, CEO of online certification platform Hero Vired, shared similar views. There is a “pressing demand” for upskilling initiatives, AI and machine learning, which will attract significant investments in the future as they will play key roles in personalizing learning, he said
In 2023, funding for higher edtech dropped to $198.1 mn from $330.8 mn a year ago