After witnessing what can be described as a funding bull run of sorts for the past couple of years, the edtech segment is losing favour with investors. While the slowdown in sectoral funding certainly has its roots in an unsettling macro environment roiling broader markets, the opening up of educational institutions has also hurt the segment to an extent with parents and students opting for more holistic classroom education. That growth has been impacted, and it reflects in the layoffs edtech players including unicorns Byju’s, Unacademy and Vedantu have resorted to. “In the last two years, offline completely shut down in the context of schools and tutoring centres. So, a lot of demand from offline went to online. With offline opening up, some of the demand that came from offline to online is bound to go back to offline. It is a natural thing to happen. Some players are therefore moving and opening centres offline to capture the demand in the offline ecosystem. In the K12 space especially, the offline medium is the mainstay medium,” says Mayank Kumar, co-founder & MD at upGrad, which operates in the higher education and upskilling segment covering learners in the 18-50 years age bracket. Kumar says that firms will have to expand their footprint in the non-metros which present a huge opportunity, and will need to devise affordable product pricing to get more users on board. upGrad is perhaps, among the numbered edtech startups that has managed to raise capital in an unfavourable funding environment. The startup unicorn just closed a $210 million investment round backed by new and existing investors including ETS Global, Bodhi Tree, Temasek and Artian Investments (the family office of Lakshmi Mittal). “In the higher education, in the lifelong learning space, if we have to do a programme, people like you and me (largely professionals), our only option is to take up something online..when the ecosystem and the offline is opening up post-Covid, the lifelong learning space hasn’t seen demand getting out of the online space,” says Kumar. The co-founder, though, acknowledged the larger funding appetite remains subdued. “One cannot run away and shy away from the fact that there is caution in the funding ecosystem. The conversation has shifted from TAM (total addressable market) or the market size and growth to unit economics, profitability and cash flows. The market is shifting from talking about not just how quickly you will get to profitability but are you profitable today..that is the reason why you are seeing layoffs…companies have built models which were not sustainable,” says Kumar.
