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As the pandemic receded, the business models of India’s ed-tech startups have started to unravel. With schools re-opening across the country, demand for online tuition has dwindled, affecting the revenue of ed-tech companies in recent months.


The pandemic helped this sector as much of the country’s $180 billion education sector went online. Companies rode a boom in the online education industry over the last two years as they bet big on the pandemic-related phenomena.


Indian ed-tech startups raised $4.7 billion in 2021, up from $2.2 billion in 2020. This made ed-tech space the third most funded Indian start-up category, only behind e-commerce at $10.7 billion and fintech at $8 billion.


But they are now laying off hundreds of employees amid a funding crunch and higher customer acquisition costs post-pandemic.


While faltering investor sentiment and slowing funding rounds have affected startups in general, ed-tech companies are among the worst hit.


So far this year, 9,000 employees have been laid off by 18 Indian startups, according to according to Inc42’s Indian Startup Layoff Tracker.




Of these, 3,000 belonged to seven ed-tech companies including Unacademy, Vedantu and WhiteHat Jr, a subsidiary of BYJU’S. Just last week, non-academic upskilling startup FrontRow, which offers courses taught by celebrities, laid off 30% of its workforce amounting to 145 staff.


A couple of them, Lido Learning and Udayy, have shut down altogether.


Saumya Yadav, co-founder and CEO of two-and-a-half-year-old Udayy, said the startup shut down because business was not growing after the pandemic and not because of funding crunch.


She said that as children went back to schools, the company faced roadblocks in growing the original model of online, live learning.


All-time high customer acquisition costs, low retention rates after the pandemic and screen fatigue contributed to the shutdown.


Unacademy co-founder Gaurav Munjal recently told employees to focus on profitability at all costs. The company’s new goal is to reach profitability and generate free cash flow, he said.


Title: Nikhil Mahajan, Executive Director, Career Launcher says, there was an endless supply of free cheap money that was channelled into ed-techs. None of these startups cracked unit economics.Money may disappear overnight for some of the smaller ones, he says adding that any business will take 4-8 quarters to go from hypergrowth to positive cash flow trajectory. Online education doesn’t deliver even 1% of physical school experience.




By 2030, India’s education market is projected to increase to $313 billion. The market size of ed-tech industry is about $2 billion. The opportunity is vast given India has the largest population in the world in the age bracket of 5-24 year with 580 million people. India has over 250 million school-going students, more than any other country.


The companies are embracing the hybrid model and innovating to scale up their offline presence because the market is still big.


BYJU’S last year acquired 32-year-old Aakash Educational Services in a $1 billion deal, marking its foray into the offline education market with 200 plus centres.


It is investing over $200 million to open 500 brick-and-mortar tuition centres in the next 12-18 months, on top the existing 80.


Unacademy last month announced its foray into offline learning with its upcoming Unacademy Centres for competitive examinations. The first such centre will be operational this month in the coaching hub of Kota, followed by Jaipur, Bengaluru, Chandigarh, Ahmedabad, Patna, Pune and Delhi.


Vedantu is also reportedly exploring hybrid options. Ankur Pahwa, EY’s India e-commerce and consumer internet leader, said most ed-tech players are working towards an omnichannel approach to improve learning outcomes and experience, create more stickiness, and reduce the cost of customer acquisitions.


Nikhil Mahajan, Executive Director, Career Launcher says, raising $50 million was like a walk in the park for companies with low revenues. Edtech startups were in a honeymoon phase for 24 months and a boom cycle comes every 5-7 years. When tide turns, two out of 50 survive, he says. Companies with cash generating business models will surie whether online, offline or hybrid. The mix between these models will be decided by markets and customers.


So, it is clear that big ed-tech firms with deep pockets are funding their hybrid move to stay in business. Some of them had made the right moves even before the pandemic started ebbing. Like other sectors where competition is stiff, the future belongs to those who can innovate while focussing on sustainability.