Explained: Indian Online Education Firms' Race To Dominate Global Edtech Space

Indian edtech startups are challenging the hegemony of United States based online education firms in a bid to grab a lion share of the global edtech market.

The global education market in 2021 was pegged at $106 billion, according to Grand View Research, and the Indian education startups are stepping up their global game to increase their share in the sector.

What's behind homegrown startups' global ambitions?

Homegrown education startups - course providers such as Scaler, Byju's, Emeritus and Simplilearn, or education infrastructure startups such as Teachmint and Classpass - are seeking global expansion after swift uptake of the digital education services in India.

Further, the companies are also emboldened by abundant flow of risk capital last year.

The Indian education startups got around 8.5 billion as investments between 2014 and 2021, with about half of that just last year, according to data firm Tracxn.

Now, with their massive war chests and ability to keep costs low by operating from India, the Indian startups are looking to foray into other markets including the US as the opportunities in the sector are only a fraction of what is available globally.

Markets where the Indian startups are expanding their business

The Indian education startups are now taking the battle of global dominance in the online learning to US-based firms including Chegg, 2U, Udemy and Coursera.

Not only the Indian edtech firms are eyeing the domestic market of the US firms but are also taking the battle to other geographies, notably emerging digital economies in Southeast Asia, the Middle East and Africa, where these firms operate.

The US online education firms are also eyeing expansion in India as the country is home to the second largest number of internet users in the world.

Indian edtech startups in US and other markets

Bengaluru-based online education startup Scaler Academy, which trains technology professionals in software development and data analytics, sold courses worth $1 million in the US in April, around a month after its launch there.

The response it got in US is significant for Scaler Academy as the company made around $5 million in April in India, where it started in 2019.

Another Indian edtech startup Byju's has spent about $750 million since 2019 to buy three education companies in the US - digital reading platform Epic; Tynker, a coding platform for students from kindergarten to 12th grade (K-12); and Osmo, an app maker for kids.

The company is reportedly also in early talks to buy US-listed Chegg, and has approached 2U as well.

In another Indian investment in the US, professional learning startup Emeritus, valued at $3.2 billion at its last fundraising, spent $200 million last year to buy iD Tech, a STEM education provider.

The companies are also tapping the markets in Southeast Asia, Middle East and Africa.

Great Learning, a Byju's subsidiary, bought the Singapore-headquartered executive education company Northwest Executive Education for $100 million.

The company has also entered into an agreement with the Qatar Investment Authority, an investor in the company, to set up a subsidiary in Doha to cater to the Middle East and North Africa.

Further, Digital classroom technology provider Teachmint and Classpluss, which sells educators tools to create online content, have also entered Southeast Asia in the past six months.

Challenges for Indian startups

“Ed-tech” became a buzzword after the onset of the pandemic in 2020 as students began to enrol on platforms that offered various forms of online coaching.

Ed-tech companies used the opportunity to raise large sums of money to fund the business helped by widespread narratives about the “new normal”. The funds were used to aggressively push sales, develop products, hire teachers/content creators, and acquire other ed-tech companies.

In this quest for growth, several Indian ed-tech companies have been facing various allegations of using coercive sales tactics, mis-selling, misrepresentation, low-quality content, etc, which led to the intervention of the Indian government in the sector.

The government is now considering regulation of online education in the country. It has already mandated that online platforms that partner with Indian universities to offer courses should be vetted by the regulator.

In addition, the firms went on an acquisition spree to diversify offerings and grow inorganically. The pace and the valuations at which the acquisitions took place indicated the high growth expectations in the ed-tech space. However, after billions of dollars have been pumped into the ed-tech space, the education technology sector appears to be slowing down in India.

SoftBank-backed unicorn Unacademy, which laid off about 1,000 people, has decided to wind up its global test preparation business.

Byju's, the world's most valuable privately held online education company, at $22 billion, has sacked about 500 people.

The company, which was on a fundraising spree last year, has reportedly been struggling to close a new round, with commitments from Sumeru Ventures and Oxshott yet to come in.

The fundraising problem is likely to compel some startups to scale back aggressive expansion and conserve capital for a rainy day.

Besides, the firms will have to face a tough competition from the local edtech startups in global markets.