Edtech juggernaut: 2 unicorns, $3.8 bn fund raise

It’s raining money for India’s education technology (edtech) companies—which have been ruling the roost in raising top dollars from investors since the Covid-19 pandemic struck early last year. That trend seems to be on an upward swing this year as well. The numbers are telling. Between January and August 2021, edtech players have garnered a whopping $3.81 billion in funding— nearly a four-fold jump from $971.5 million in funding during the same period last year—according to data from analytics firm Tracxn.

During the period under review, the space also saw the addition of two new edtech ventures: upGrad and Eruditus to India’s coveted unicorn club—which are privately-held companies that have reached a valuation of $1 billion or more. Early last week, upGrad raised a total of $185 million valuing the company at $1.2 billion, followed by Eruditus which raised $650 million, valuing the startup at $3.2 billion.

Tracxn’s data reveals that India’s largest edtech company Byju’s attracted the lion’s share of approximately $1.7 billion of investments so far this year. The Bengaluru-based company was valued at about $16.5 billion during its last fund raise in June, 2021. Earlier this month, cross-town rival Unacademy raised $440 million that catapulted the edtech major’s valuation to $3.44 billion. The data includes funding rounds between January 1 and August 16, 2021. Word on the street is that Byju’s is looking to raise over $1 billion at a valuation of about $21 billion.

Despite the Covid-19 pandemic disrupting businesses across industries, edtech was the most funded sector in 2020. According to the EY-IVCA India Trend Book 2021 report, last year, India’s edtech companies raised over $2.2 billion in funding—with Byju’s alone accounting for $1.4 billion in funds raised. The pandemic has accelerated the adoption of digital platforms in India including sectors such as edtech. Another EY report on the Indian edtech industry dated April 2021 stated that data usage in India in the calendar year (CY) 2020 increased by 34% compared to CY2019. The time spent on mobile and application downloads also witnessed a surge of 31% and 21% respectively in CY2020 versus the previous year.

Besides the billion-dollar fundraise, the edtech space also witnessed some key consolidations both in the offline and online space this year. In April, Byju’s acquired Blackstone-backed Aakash Educational Services for nearly $1 billion—making it the biggest in the Indian edtech space. Aakash Educational Services is one of India’s leading players in the brick-and-mortar test prep space and claims to have over 200 coaching centres across the country.

Last month Byju’s also made three acquisitions for over a billion dollars. U.S.-based Epic—an online library for kids aged 12 and under—for $500 million, followed by Singapore-based Great Learning—an online professional and higher education company—for $600 million and Mumbai-based Toppr, an after-school learning platform for $150 million.

“Aakash provides an offline brick-and-mortar powerful domestic domination engine while Toppr in the K-12 (kindergarten to 12th grade) after-school learning space reaffirms an ability to match competition in the crowded K-12 market,” Piyush Sharma, a global CEO coach and a C-suite and startup advisor, said.

Mohan Lakhamraju, founder and CEO of edtech firm Great Learning—which was recently acquired by Byju’s—believes that the deal will give Byju’s access to a team that knows the higher-education space well with a strong proven track record. “We saw a partner (Byju’s) that has a long term orientation and a strong alignment of vision and deep pockets,” he added.

With funding available across different stages of growth, only time will tell if this buoyancy will be sustained in the edtech space going forward.