Upheaval In Edtech
The edtech sector, one of the fastest growing markets during the pandemic, faced huge losses, funding crunch, restructuring and layoffs
The final quarter of 2021 saw the start of the funding winter. In its wake, four edtech startups were shut down, including Udayy, SuperLearn and Crejo.Fun and Lido Learning.
As the threat of the pandemic subsided, schools, colleges and coaching centres re-opened their doors. Despite the push towards hybrid and phygital as the future of education, demands for edtech services in the K12 and test prep sectors were heavily impacted, complicating the scaling up these startups.
While K12 segment faces downturn; certification, skilling and job-focused edtechs gained traction, collaborating with industry and educational institutes alike, - which also legitimises their position. Upgrad admist layoffs, announced 1400 new hirings on their platform.
According to ‘Tracxn Geo Annual Report: India Tech 2022’, edtechs saw funding drop by 39 per cent in 2022. Byju’s raised USD 1.2 billion in 2022, that accounts for 50 per cent of the total investment made in the sector. LEAD, upGrad and PhysicsWallah also raised more than USD 100 million in funding rounds.
While the online structure cuts cost significantly, it has not witnessed much growth. Unacademy and PhysicsWallah have set up physical centres for their test prep classes. While Byju’s, famously, acquired Aakash at USD 1 billion to enter this space and expand its hybrid model and Vedantu acquired Deeksha at USD 40 million.
Indian unicorns compromised on profitability to maintain its valuation, while the economic slowdown brought pressure from investors to push profitability. The largest setback, however, came with the mass layoffs that shook confidence in the whole sector. More than 6000 employees were let go in the edtech sector alone in 2022. Byju’s let go of 2,500 employees, closed offices in 60 cities and announced plans to restructure its marketing strategy. Vedantu let go of 1,100 employees (approximately) and Unacademy laid off 10 per cent of its workforce. Teachmint has been the latest to join this streak of layoffs, letting go of 45 employees that make up five per cent of its workforce.
In the coming year, the sector will likely see some stabilisation. As education continues to find the role of edtech in and outside of the classroom, the major challenge ahead for edtech companies now is to rebuild and maintain customer trust and plan for long-term sustainable solutions.
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