Edtech, telemedicine startups’ moment under the sun

Until recently, Vamsi Krishna, co-founder and chief executive officer at online education startup Vedantu, was busy solving, among other things, a riddle: How to increase awareness about his trade.

“Awareness was a big challenge,” he says.

Vedantu offers live online classes to K12 students and competes with a host of offline tutorials nestled in the nooks and corners of the country. For Vedantu to survive and thrive, the startup needs to wean away students from the bricks-and-mortar setups. This is a tough ask as Indian parents still appreciate the proximity of teachers, a mindset that has kept Krishna and a clutch of other online education startups busy devising ways to turn the tide in their favour.

The scenario seems to be changing. The nationwide lockdown triggered by the Covid-19 outbreak has prompted scores of students, stuck at homes with schools and tutorials closed, to flock to online education portals. Education startups, in turn, have seized the opportunity by making courses free until the lockdown persists. The timing of the lockdown also helps. New academic sessions begin around April. Consequently, the first quarter of the academic year is considered to be a fertile period for education startups to acquire customers.

Close to 100,000 students have subscribed to Vedantu’s courses in the past 10 days, which is, of course free now. Vedantu, which has raised about $85 million from Accel Partners, Tiger Global Management, and TAL Education Group among others, otherwise adds about 50,000 paid users annually.

While the users acquired over the past week don’t pay, Krishna has enough reasons to take heart from the development. Their engagement on the platform is albeit is less, but, comparable with the paying cohort, implying that some of these students could potentially convert to paid subscribers.

“We look at this as an opportunity where we can spread the awareness of live teaching. Honestly, we aren’t immediately thinking about what will happen later. But, one thing is for sure that the awareness about the category is shooting off the charts,” says Krishna.

In such times, making some of their courses free has worked wonderfully as a customer acquisition strategy.

“Businesses will be businesses at the end of the day. Businesses will do things that are both good for them and their customers. If this is a move that we can make that is both helpful to us and our customers, we will do that,” says Zishaan Hayath, cofounder and chief executive officer at Toppr.

The firm, which has raised about $50 million in venture capital from Saif Partners and Eight Roads Ventures among others, has also made its live classes free. Toppr, which clocks about 200,000 paid customers annually, has seen new a 180% increase in subscribers in the week of 26th March over the previous week.

While online education startups have seen a steep surge in demand, telemedicine startups are also having their moment under the sun. The online healthcare segment, of late, have been dominated by medicine delivery startups. The likes of 1mg and Pharmeasy, for instance, have raised $70 million and $220 million respectively in the past nine months. While these companies also offer remote doctor consultation and diagnostic services, medicine delivery remains to be their core offering.

As is the case with online education companies, online doctor consultation is also plagued by a patient’s propensity to visit a doctor, largely because of a trust deficit on remote consultations.

That seems to be changing. Mfine, a startup that partners with hospitals for remote consultation services, also offers medicine delivery and diagnostics services, but, telemedicine remains its most used service. It expects to facilitate at least 5,000 daily consultations by end of April, a five-fold surge from about a thousand daily consultations until March. The firm has raised about $23 million from a clutch of investors including Stellaris Venture Partners and Prime Venture Partners.

“The current scenario is quite favourable for online doctor consultations as people don’t have many choices and options,” says Ashutosh Lawania, co-founder of Mfine.

In fact, on 25 March, a board of governors vested with the powers of the Medical Council of India has issued a fresh set of guidelines supporting telemedicine (the National Medical Commission Bill, which seeks to replace the council, is pending passage in Parliament).

“Disasters and pandemics pose unique challenges to providing healthcare. Though telemedicine will not solve them all, it is well suited for scenarios in which medical practitioners can evaluate and manage patients,” the note says.

“Telemedicine practice can prevent the transmission of infectious diseases, reducing the risks to both healthcare workers and patients. Unnecessary and avoidable exposure of the people involved in delivery of healthcare can to be avoided using telemedicine and patients can be screened remotely,” it adds.

Lawania sees this as a big endorsement of his business by the decision makers.

Yet, despite the unprecedented demand, the online education and telemedicine startups aren’t exactly celebrating. “It’s too early,” says Krishna of Vedantu.

There is a sobering lesson to be learnt from the aftermath of demonetisation. Digital payments shot up immediately after demonetisation, initially triggered by constraints and then by benevolent incentives and cash backs doled out by service providers. However, the growth rate has since plateaued as the impact of demonetisation wore off. The past few months have been particularly sobering. For instance, with number of UPI transactions stood at 1.24 billion in March 2020 as against 1.21 billion in November 2019, as service providers rationalised incentives, apart from a cutback in consumer spending.

A similar pattern cannot be ruled out for the online education and telemedicine companies as well. They are mindful of such a scenario.

Says Lawania of Mfine, “If you look at share of online consultation today, it is just the beginning. There is a big opportunity and scope. When things become normal, the growth may be slower, but, we believe a lot of users will continue using online services, while some will go back to traditional means. But, even if we can take 5-10% share, it will be a huge number in absolute terms.”

Hayath of Toppr concurs. “For any company to survive and thrive, you need to build a great product. Earlier, the challenge was, nobody tried or took you seriously and nobody gave you the trial that you deserved. Now you have got the trial and the mindshare,” he says, adding even if the growth rate slows, the company would be much bigger than when the rush began.