Ed-tech startups attracted more than $2 billion funding: IVCA-PGA Labs report

Lockdown imposed due to the spread of COVID-19 has increased the demand for ed-tech products in India manifold. Indian ed-tech has raised $4 billion in the last five years, out of which ed-tech startups received a total investment of $2.22 billion in 2020 alone (compared to $553 million in 2019).

This according to Indian Private Equity and Venture Capital Association (IVCA) and PGA Labs, the market intelligence business of Praxis Global Alliance’s report on ‘The Great Un-Lockdown: Indian Ed-tech’.

The report highlights that education is a $117 billion market in India with over 360 million learners in FY20. The market is further expected to grow 2x to $225 billion by FY25 @CAGR 14 percent over the next 5 years.

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The past few years have witnessed the emergence of the ed-tech sector with supplementary learning opportunities for students and working professionals. The growth of the ed-tech sector has coincided with increased internet penetration in the country, particularly in tier 3/4 cities and villages.

The sector has also seen increased investor activity due to the tremendous growth potential of the ed-tech players in India. Segments such as online tutoring and competitive exam preparation have witnessed an increase in investments by PE and VC players in the past few years.

This year, ed-tech players have scaled up their offerings and new players with innovative business models catering to unserved segments have emerged post-COVID-19. Also, the recently introduced National Education Policy 2020 is expected to give a fillip to ed-tech (both, in the classroom and outside the classroom) due to increased focus on concept-based learning for students.

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Madhur Singhal, practice leader, education, employment and entrepreneurship, Praxis Global Alliance said, "With an increase in focus on self-paced learning, an informed selection of tools/aids on top of better awareness & accessibility, and the idea of continuous learning beyond schools & colleges via professional education courses is driving innovations in the way learning content is being a consumer and delivered in India."

In terms of funding, 92 players raised funds in 2020 out of which 61 players received a seed round. BYJU’S and Unacademy raised the most capital at $2.32 billion and $354 million respectively this year.

The education sector has received growing attention from the government with budgetary allocation increasing from $11.3 billion in 2018-19 to $13.2 billion in 2020-21. The report states that India is one of the largest markets for education with 360 million learners in FY20 and is home to some of the largest ed-tech companies with a global marquee investor base.

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Rajat Tandon, president, IVCA said, "Ed-tech is one sector which goes in sync with the Moore's Law, with the advancing tech, education technologies in India have become a change maker." He added, "These are testing times for so many entrepreneurs globally, but ed-tech in India has emerged a clear winner."