Edtech finally puts India on the global education investment map


Mumbai: Several scale edtech companies have emerged in India and globally with multi-billion dollar valuations, at a faster pace than brick and mortar companies.

From 2016-2019, edtech investments worldwide grew at a CAGR of more than 30%, hitting ~USD 18+ billion in deal size in 2019. At the same time, global edtech VC funding also grew at a CAGR of ~30%. India edtech inc. is quickly following suit with several large-scale companies attracting global investment. L.E.K. Consulting’s India Edtech Report (2020) highlights the demand-side and supply-side growth levers that enable value creation opportunities to flourish in the region.

The recent findings by L.E.K. Consulting’s Global Education Practice explore the surge in multi-billion-dollar edtech companies within India, including BYJU’s, Vedantu and Unacademy. The recent uptick that the Indian edtech space has witnessed is a long-term answer to various systemic issues prevalent in the country’s education system.

According to L.E.K., unlike most formal education segments in India, which are bound by restrictive regulations, the regulatory environment for edtech is favorable, making it attractive for investors. Furthermore, COVID-19 has accelerated edtech adoption exponentially across age groups, city-tiers and sub-segments. The L.E.K. India Edtech Report observed a 30-44% increase in adoption across various sub-segments.

In addition, users have increased time and money allocated to online education. Supplemental K-12 segments have especially indicated stronger preference for online learning over offline. The report highlights that ~50% parents were highly satisfied with the online after-school tutoring experience. These users are expected to continue with this format of content consumption post COVID-19 (particularly after school tutoring).

Danish Faruqui, Managing Director at L.E.K., shared his perspectives on these emerging trends. “From a macroscopic perspective, the optimistic investor sentiment in the Indian edtech space can be explained by the fundamentally strong demand drivers, favourable demographics and the rapid emergence of disruptive enterprises. Across supplemental K-12 education and online higher education, our report found that ~60% users are highly likely to continue with online learning post-COVID-19. Furthermore, Indian regulation is prohibitive for investor funds to capitalise on traditional spends in education (for e.g., schools and colleges), thereby making edtech a more attractive business model to yield greater returns” said Faruqui.

L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. The Global Education Practice is a specialist international team based in Singapore serving a global client base from China to Chile. The team’s 70-plus consultants and seven partners have completed more than 700 education sector engagements across more than 90 countries, serving CXOs and boards of some of the world’s largest educational organizations. Our experts bring insights into education businesses, investment opportunities, market dynamics, and impact across segments from K-12 to edtech.