A significant drop has been witnessed in EdTech funding in 2022 as compared to 2021, with the sector seeing a decline of 39 per cent in the last 12 months, as per market intelligence firm Tracxn's report. About 70 per cent of funding was made up of five rounds worth over Rs 82 lakh ($100 million) rounds raised by EdTech firms Byju's, Upgrad, LEAD School and PhysicsWallah, as stated in a report by The New Indian Express.
Since the reopening of schools and colleges post the pandemic, the EdTech sector had been struggling, forcing many companies to fire employees to minimise operational costs. In 2022, a total of over Rs 22 crore ($24.7 billion) in funds was raised by Indian start-ups which was 35 per cent lower compared to the same period last year over Rs 30 crore ($37.2 billion), the report read.
What can be the reason for the decline in investments? The report attributes the drop to a decline in late-stage investments that fell by 45% from over Rs 24 crore ($29.3 billion) in January-November 2021 to over Rs 13 crore billion ($16.1 billion) for the same period in 2022.
Sharing her views, Co-Founder, Tracxn Neha Singh said, "Rising interest rates and fears of global recession have led to investors becoming more risk-averse, continually slowing down the funding momentum in the Indian start-up ecosystem." Further, "The funding winter, which began in Q4 of 2021, will persist in 2023 as well. To survive the drought, start-ups are taking unit economics more seriously. Although we are currently experiencing a slump, the situation is prompting start-ups to establish clearer and more sustainable paths to growth, as investors' evaluation metrics begin to emphasise good profitability over growth at all costs," she added.
