Ed-Tech is the place to be right now. In a latest news BYJUS – India’s largest online learning platform acquired WhiteHat Jr., a startup that teaches coding to kids online coding. It was a $300 million all cash-deal.
It’s a sign of the frenzy that ed-tech is witnessing right now.
By March of 2020, the face of the education sector had changed drastically for the foreseeable future. The coronavirus pandemic forced the world to shift to e-learning: teaching via digital platforms. Research suggests that globally, there are 1.2 billion students affected by the closure of schools and universities due to the pandemic. With remote learning measures likely to be around for a while, the worldwide education market has also seen a big shift – investment into education technology.
With an increased demand, some online learning applications like BYJU’s in India have started offering free services – a move that’s led to a 200% increase in usage, making it the world’s most highly valued ed-tech company. Other companies have also adapted quickly.
Take the tech company Lark, for instance, which is now offering teachers and students unlimited video conferencing time, auto-translation capabilities, real-time co-editing of project work, and smart calendar scheduling. Companies like AliBaba have also capitalised on the opportunity, providing students with cheap cloud space for schoolwork.
Not surprisingly, over the last five months ed-tech companies have reported increased usage of between 100% and 500%. In India, for instance, companies like UpGrad, Vedantu, Toppr, Simpilearn have reported 100% increase in paid users following the lockdown. Global MOOC providers like Coursera and EdX have also seen a whopping surge in paid users across the world – particularly in India. With little option to go out, there’s been a 50% increase in time spent per student per day, changing from 60 minutes to 90 minutes Additionally, research shows a 40% increase in willingness to pay for online learning, and an astounding 83% jump in the paid user base.
Like it’s done for so many others sectors, in ed-tech too COVID’s accelerated the change. Ed-tech was seeing a growth even pre-pandemic. COVID brought it to its tipping point.
From mid-2019, and particularly in 2020, ed-tech companies have seen incredible business growth. The story in India alone is fascinating – Indian ed-tech start-ups raised $296 million in the first half of 2019. In comparison, they’ve managed to raise $795 million by the first half of 2020. So, where are the funds coming from? A large portion of ed-tech funding is by using seed funding: wherein an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in the company. In the first half of a fiscal year 2020, edtech was India’s second-most funded sector (according to YourStory Research).
Global technology investment firms have become large players in providing funding – particularly those like BOND that have poured millions of dollars into apps such as BYJU’s. Other Big Tech companies like Facebook and General Atlantic have also invested close to a 100 million dollars in Indian ed-tech companies like Unacademy. Funding, unsurprisingly, has only increased since distanced and remote learning has become the norm. Finally, there has been a rise in partnerships between ed-tech companies and educational institutions like schools and colleges – who pay a higher institutional fee, but also allow a wider reach and increased access.
While ed-tech companies globally have collectively managed to raise billions of dollars for themselves, they do also face certain challenges. To begin with, advertising and brand positioning is complicated – it’s difficult to understand how to pitch ed tech companies to the public, and to understand who the audience for advertisements should be.
Should they target children and students, who are the consumers, or should they focus on parents, who pay the bills and are effectively the customers? While some research claims the latter is more effective, there is no concrete way of knowing which the better option is.
A similar challenge is for these companies to choose what to monetise on their websites. While it is crucial to have a wide pool of high quality content that appeals to users, it is difficult to gauge how much it is necessary to provide free to convince users that a paid subscription is worth their money. It is a delicate balancing act: if you provide too much material for free, users have no incentive to pay for it. However, if you provide too little, there isn’t enough consumer confidence for them to invest in your services. With the coming of the pandemic, however, parents seem to be investing regardless of free trials and advertising strategies – it’s also a way of keeping children both busy, and productively engaged.
The growth of edtech in India seems to be on the upswing – it seems like the perfect place to be in. There’s a wide user base, there’s a need and there’s the willingness – all great factors for success in any business. But (there’s always a but) here’s the thing – one, there are quite a number of education providers, and, more importantly, also a number of regulators and bodies dealing with the online learning process. What makes it difficult is that India has no streamlined laws or regulations dealing with ed tech companies and online learning in particular. And the lack of a singular regulatory body is what complicates operations for Ed-tech companies here.
Also, the Indian user database is only deceptively large. In a country of 1.2 billion people, the reach of ed-tech companies is limited to a very small percentage of students. Patchy internet connectivity, lack of data plans and internet access devices, as well as other socio-economic barriers in India make it difficult for these companies to expand their reach. In terms of policy, government support is limited. While schemes such as the SWAYAM scheme and the DIKSHA scheme have been launched, they have had very little grassroots effect, and access to online learning still remains a luxury for some, and unattainable for most. So, while business is booming for the Ed-Tech industry, companies providing these services must also work with both policymakers as well as regulatory bodies in countries all over the world – to ensure that they provide quality content, and to use this unique opportunity to bring education into everyone’s homes, making it the norm, and not simply a luxury.
Challenges aside, the edtech sector is booming – riding on the remote-life wave. The pandemic has caused billions of children to stay indoors and their anxious parents are turning to online solutions to keep the learning going. It’s a sector that will continue to see a meteoric rise. In India, says a recent report by RedSeer and Omidyar Network India the edtech market will touch $3.5B by 2022. Globally that the market size is estimated to reach $285.2 billion by 2027 according to Grand View Research, Inc.
Will the projected numbers keep up post-pandemic? While that remains to be seen, what’s been established is that Coronavirus has been a game-changer for the education technology space. The future of edtech is here.
Also find out more about Big Tech in healthcare.
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