Eximius Ventures
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Eximius Ventures

What Will Be the “New Normal” for Edtechs after COVID?

The COVID-19 pandemic has coerced the edtech space to evolve rapidly. Now, experts are estimating the market to grow between $10B to $16B by 2025. However, ~$4.5B of VC funding has already been poured into a $1.5B edtech market. While this is encouraging for newer edtech founders and investors, both need to analyze and understand the future of edtech to make better informed decisions.

After surveying 400+ users in our 3-month long research on edtech, we identified three key trends that would define the “new normal” for edtech in a post COVID world:

K-12 vs. Beyond K-12
School-going children require more hand holding and personal attention. Moreover, being in the same vicinity as educators and peers is necessary for students in K-12 for developing critical thinking and innovative thinking skills. Thus, a complete transition to the online mode would affect learning outcomes.

Due to this, K-12 edtech companies that are modelled to entirely substitute school learning could be the first to lose traction post-COVID. However, supplementary content for the segment would perform better relatively.

Beyond K-12, learners seeking higher education and help with test preparation are more likely to stick to online education for convenience as well as accessibility.

Willingness to Pay

Out of their annual spend on education, users are not likely to spend more than one-fourth on online learning. The primary takers are traditional institutions or schools, and also offline hobby classes, tuitions, etc. Edtech, therefore, would be recognized as a platform for additional enhancement.

Unless edtechs are able to increase their value add, converting existing users to paid users would be a big challenge. To put things into perspective, less than 10% of the total users are paying for these services today.

Consolidation of Startups
India has ~4,500 active edtech startups. However, user engagement and content delivery are harder to manage for smaller edtech companies that have low tech expertise and capability, content, resources, and funding.

Segments within edtech could be oversaturated and a few large players would dominate the market, making it a viable option for existing edtechs to take the exit route and merge with them. Early signs of this trend are already visible in Byju’s’ acquisition spree in the last 2 years.

Final Thoughts

COVID has redefined consumer behaviors. While existing players have stepped up, we can also see newer categories — startups that innovate tech for delivery or enhance learning performance. Since tier-2 and tier-3 cities have a very different value proposition, we might find a larger class of startups springing up with tailored solutions.

For now, edtech platforms can expect a dip in traction immediately after offline channels resume earlier pace. However, COVID induced lockdowns have shown the potential for these platforms to be an effective education channel and that these are here to stay.

If we think beyond, the pandemic won’t be the sole big factor determining the industry’s future. While we have a good decade until the National Education Policy is fully implemented, its plan to leverage technology would structure and shape the edtech industry. As a result, public sector spending could increase, which would define the focus for edtech companies as well.



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