Artificial intelligence and other technological advances are expected to transform nearly a third of the world’s jobs by 2030. That’s helping to drive global demand for upskilling. The trend is particularly prominent in India, which has built a vibrant ecosystem of educational tech providers over the past several years. After a rough patch amid a global funding downturn, India’s edtech sector is staging a comeback.
This month, Mumbai-based Eruditus raised $150 million in a Series F round led by TPG Rise Fund, giving it a $3 billion valuation. The startup, which offers executive education programs through partnerships with 80 universities globally, will use the funding to expand and invest in artificial intelligence, or AI. The round was also backed by the Chan Zuckerberg Initiative and SoftBank Vision Fund 2, among others.
TPG Rise’s Steve Ellis said at the time that the startup’s mission “aligns with a core investing theme for The Rise Funds, which focuses on backing strong businesses that are opening pathways to high quality education and driving greater lifetime earning potential for their students.”
Also this month, upGrad, which calls itself South Asia’s largest edtech company, secured $60 million from Singapore’s sovereign wealth fund, Temasek, at a flat $2.25 billion valuation. The Mumbai-based company will use the funding to offer its university and corporate upskilling courses across the UK, the US, the Middle East, India, Singapore and Vietnam.
The sector is also helping to improve basic education. PhysicsWallah in the northern state of Uttar Pradesh, whose online curriculum is aimed at students in grades 6 through 12, including those applying to engineering, medical and dental schools, landed $210 million from Mumbai-based Hornbill Capital Advisers and others at a $2.8 billion valuation in September.
Edtech appetite and resilience
India’s edtech industry boomed when schools and universities locked down in 2020 and early 2021 as the Covid pandemic unfolded. But the boost to remote learning and training was short-lived, as investors pulled back amid macroeconomic pressures and students later returned to traditional learning.
What didn’t change: Demand for skilled professionals in the country of more than 1.4 billion. With 900 million Indians forecast to be active internet users by next year, the country is ripe for startups focused on remote education and training through apps and online courses.
Many Indians also use smartphones, are young and consume online content robustly. The government has several initiatives to promote e-learning.
Those factors, combined with a lack of cost-effective and quality educational content in traditional schools and a shortage of teachers, particularly in cities with fewer than 10 million residents, give edtech startups a significant opportunity, the India Brand Equity Foundation, a government trust, says.
But the sector also faces the challenges of poor connectivity in rural areas and resistance to learning remotely, rather than in traditional schools.
Market opportunity
Dublin-based business data firm Research and Markets said last year that the sector, which has roughly 4,450 startups serving approximately 300 million school students, could be worth $10.4 billion by next year. Tracxn, an Indian data and market research firm, calls India the third highest-funded edtech ecosystem in the world.
The recent mega deals come amid an overall slump for the sector. Remote education startups in the country raised $4.73 billion in 2021, an all-time peak, data from Tracxn shows. That year, Temasek led a $440 million investment in Bangalore-based Unacademy, giving the startup a valuation of more than $3.4 billion. (The company has since closed business lines and laid off workers.)
Last year, the sector’s funding sank more than 90%, to $321 million. Through August of this year, before the recent deals, the sector drew only $215 million.
With capital scarce and the sector fragmented, startups are going on acquisition binges. Google-backed Adda247 has snapped up five competitors, two this year, Tracxn data shows. In July, Schoolnet, headquartered in Uttar Pradesh, bought Mumbai-based Genius Teacher, a quiz-based learning app for K–12.
