Online education during the COVID-19 pandemic has revolutionised the way we learn. Not just the innovation, but it’s the deal dynamics that has kept the sector very exciting. Edtech companies have raised $2.5 billion so far this year and have been seeing consolidation as a key theme forever as the big companies get bigger commanding higher valuations.
Four unicorns have recently emerged and maybe many more are in the making. So, what is the syllabus that these edtech companies are likely to follow on the deal street? Pranjal Kumar of Eruditus - the newly formed unicorn, Imran Jafar of Gaja Capital and Ajay Shah of EY discussed the key themes emerging in online education.
A couple of things have happened on deal street. COVID-19 has given a huge tailwind to the entire online education. “A lot of the education companies have seen a huge growth in last 12-18 months because of COVID-19. Because of this growth - all these companies have seen a huge expansion in the portfolio in terms of the areas they cover as well as markets and geographies that they do,” Shah said.
He added that there has been a huge investor frenzy in the sector where a lot of capital has been pumped into these firms. And this, has driven consolidation where the larger companies have gone for acquisition and are using the inorganic route for going faster, he said.
Global firm Eruditus’ Kumar said, “only 20 percent of our business is sitting in India, balance is all global and our idea is to always look at assets and companies which have global potential or have already proven that they are global,”
He noted that mergers and acquisitions (M&A) is clearly part of the firm’s strategy and it wants to continue playing in the skilling and professional learning space. The company wants to strengthen core offerings and part of the M&A would go into launching new products and entering new markets, he said.
Meanwhile, Jafar believes that over the next decade, India will be the largest education market in the world.
“The investor appetite that you see is a reflection of mainstreaming of this asset class. We have been saying for 16 years that India is the most attractive private education market in the world and for a variety of reasons – we are a young population, there is a culture of education and the gross enrollment ratio where India is catching up with the rest of the world – there is one other factor where India is uniquely positioned, 45 percent of our education spend is in private education compared to 10-15 percent in the US and China. So, our view is that India is the top three edtech markets in the world,” he said.
For the entire discussion, watch the accompanying video.