Winter is coming!
No this is not a reference to Game of Thrones. This is about EdTechs.
As stated by Gaurav Munjal, Co-founder and CEO of Unacademy and featured widely in media reports, "Winter is here. We must change our ways. We will focus on organic growth channels instead" and this "funding winter" might last up to 24 months.
Vedantu is also harping on the same string. Co-founder Vamsi Krishna had shared, "With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 9x Vedantu experienced during the last 2 years will also get moderated."
Lido Learning, Udayy and others have shut shop entirely.
While there are a few EdTechs who are lost at sea, there are others who are braving the storms with new vigour. And they are not really feeling the chills that the others are.
How come though? If they are all sailing in the same troubled waters ridden with problems like COVID, the Russia-Ukraine war, inflation in the US, recession and the biggest factor — how the pandemic has changed the way we learn. That's because EdTechs are working for a different age group or a different stream.
Those staying afloat
Take PrepInsta, for example. They are on a hiring spree! Doubling their manpower. What's more? They are aiming to hire a lot more, about 100 to 120 people in the next 6-18 months.
PrepInsta is a platform that provides skill-based learning and placement interview preparation to students. When we ask its Co-Founder and Chief Operating Officer (COO) Aashay Mishra what might be the reason behind the mass layoffs, he said, "COVID lockdown in China, global change supply, inflation in the US and Russian-Ukraine war are some of the factors behind the uncertainty in the market which is making it hard for companies to raise funds."
"While Unacademy and some other firms are laying off their employees; Scaler, a tech school with coding skills and UpGrad which is into higher educational learning courses are sailing their boat well by growing," noted Aashay.
Now, when it comes to biggies like Great Learning which is a unit of BYJU'S that offers coaching and degree for undergraduates and working professionals via blended mode, Co-Founder Arjun Nair informed, "We believe online learning is going to continue and people will accept it. Both online and offline are here to stay and they will continue to stay."
Expecting a change in the choice of the general public, the Co-Founder said, "Those who opted for the poor-quality classroom-based programme will stop as they have access to online learning from the best institution."
There are other biggies in the name like BYJU'S who are focussing on offline centres too while Unacademy is venturing into the same.
Filo, which enables interactive live sessions between students and tutors, believes that irrespective of online or offline classes and hybrid models preferred by people, Filo is always going to be active. "Most of the EdTech firms in India are Ed and digitisation of Ed firms," said Co-founder and CEO of Filo, Imbesat Ahmad, adding that it's a hard time for EdTechs but Filo is hiring more people as their numbers are rising.
Commenting on other strategies required to keep up in the race, Imbesat said, "As we are too early in this game, the market of India is too big for us. Hence, even though we can explore the requirements of systems deeply to create more horizons, we are not trying."
Now, Imarticus Learning, which specifically offers training in financial services and analytics to young and experienced professionals, believes in "constantly updating programmes to keep up with the trends and technologies as this allows the learners to learn at their own pace under experts guidance," said the COO and Co-Founder Sonya Hooja.
A different viewpoint
Acknowledging all these points mentioned by various firms, one may wonder what is the key factor behind the EdTech space finding itself in the current situation of cost cuts and funding scarcity? To lend a different perspective, from the side of investments, BLinC Invest highlights a few points.
Briefing about how the company was functioning pre-COVID, during and post-COVID, Amit Ratanpal the Founder and MD of BLinC Invest, which funds emerging EdTech and FinTech start-ups, stated, "Pre-COVID time there was a growth of around 40-60% and as more companies invested, there was a steady sustainable business growth. But during COVID, since everyone was restricted to staying indoors, the businesses grew fast, specifically co-curricular businesses, even though many schools, colleges and tutorial companies were not yet ready with the entire online processing systems and technological adaptations. In post-COVID times, firms witnessed stability as they built extra capacity keeping in mind that the user behaviour may appear differently."
While advising the EdTechs, the venture capital company shared, "Being very objective and rationalising the cost, that is, the product genuinely valued by the customer or what differentiation does it bring in customers life and so on is important while deciding whether to create a product or not."
As a few firms state 'Winter is Coming,' the founder shares that, "Our focus is on the net outcome of what customers want and we convey to our founders, it is acceptable to grow 100% rather than 500% and to create a sustainable business. With this, there may not be any fundamental changes in our approaches as it feels like a good time to invest in the Education sector."
Further sharing his opinion on cash crunch and cost cuts, the MD emphasised, "It is very community-specific and for companies built on fundamentals that there is an outcome and they will grow steadily with enough cash, the winter is not coming as they are not playing in terms of always funding to achieve sustainable growth. On the contrary, for companies built on huge sums expecting to raise capital every 6-18 months, they have to westernise."
Predicting the trends
With firms finding it difficult to raise funds till the next 24 months and market uncertainty, PrepInsta thinks there may be a steady market for start-ups. On the other hand, Filo thinks people are coming with hybrid options as they are opting for infrastructural investment which will not only empower local learning but is also inclined toward all horizons across different languages.
Imarticus Learning is inclined toward Virtual Reality (VR) tools and gamification as these tools transform the educational experience by offering the learning material in a simulated environment.
Additionally, BLinC Invest states, "As India has an unorganised market, there will be a merger of two or more companies for deeper penetration of clients by providing more services for a product." It further insists on "Indian EdTech overseas" which provides pre-education to students planning to study abroad and believes that co-curricular is going to emerge as a big opportunity.
Hence, Winter is here might just be too far-reaching a statement to make. Or maybe it doesn't apply to every player in the game of EdTech.
