Bhoomika Singh
Tracxn, a global SaaS-based market intelligence platform, has released its EdTech India – Feed Geo Report. The report, based on Tracxn’s extensive database, provides insights into the Indian EdTech space.
The Indian startup ecosystem is one of the top three funded geographies in 2023 YTD in the EdTech space, next to the US. Despite this, this space has experienced a declining trend in funding, similar to its global counterparts.
The global EdTech market has been facing challenges attributed to decreasing demand for online education, ongoing funding constraints, rising interest rates aimed at controlling inflation, and economic uncertainties. Nevertheless, the Indian EdTech sector shows promise due to a demand-supply gap between teachers and course availability in offline education, which might fuel the sector’s growth in the coming years.
Most of the funding into Indian EdTech startups in 2023 so far was secured in the second quarter. This space observed funding worth US$ 713 million in Q2 2023, accounting for 73.43 per cent of the total funding raised this year. This is also an increase of 37% compared with the corresponding quarter last year.
Total funding into the Indian EdTech space plunged 48 per cent to US$ 971 million in 2023 YTD (January 1, 2023, to August 7, 2023) from US$ 1.87 billion in the same period in 2022 and declined by 50 per cent as against the same period in 2021, while the number of funding rounds in 2023 YTD experienced a drop of 77 per cent and 82 per cent compared with the same period in 2022 and 2021 respectively.
Late-stage investments worth US$ 879 million have been recorded in 2023 so far, contributing to more than 90 per cent of the total funding, which is also a drop of 23 per cent compared with US$ 1.14 billion raised in the same period in 2022 and a drop of 39 per cent from US$ 1.44 billion raised in the same period in 2021.
Early-stage investments worth US$ 75.7 million were recorded in 2023 YTD, an 88 per cent drop from US$ 618 million raised in the same period last year and an 82 per cent drop compared with US$ 414 million raised in the same period in 2021.
EdTech startups raised US$ 15.7 million through seed-stage rounds in 2023 YTD, a drop of 85 per cent from US$ 105 million raised in the same period in 2022 and an 83 per cent drop from the same period in 2021.
K-12 EdTech, Test Preparation Tech and Higher Education Tech were the top-performing segments in the EdTech sector based on funding in 2023 YTD. K-12 EdTech startups have raised a total of US$ 711 million in 2023 YTD, a fall of 45 per cent and 56 per cent compared with the same period in 2022 and 2021 respectively.
No new Unicorns have so far emerged in this sector this year, as against two new Unicorns in the same period last year. 2023 YTD witnessed seven acquisitions, a 70 per cent decline compared with 23 acquisitions in the same period in 2022 and 19 acquisitions in the same period in 2021.
Among Indian cities, Bengaluru takes the lead in terms of total funds raised till date, followed by Mumbai and Gurgaon. EdTech startups in Bangalore have raised a total of over US$ 8 billion as of August 7, 2023, followed by Mumbai (US$ 2.5 billion) and Gurgaon (US$ 497 million).
In the last two years, We Founder Circle, Peak XV Partners and MMPL Trust, were the most active investors in this space. We Founder Circle, IPV, and LetsVenture were the top seed investors, while Peak XV Partners, Better Capital, and AngelList were the top early-stage investors. MMPL Trust, WestBridge Capital, and The Chan Zuckerberg Initiative were the top late-stage investors.
Additionally, The EdTech space has brought about a significant positive change in the country by making education accessible and bridging the gender gap in terms of education. With government support, advancements in technologies such as AI, and the growing adoption of the internet in Tier-2 and Tier-3 cities, the sector holds the possibility of substantial growth in the near future.
The Indian EdTech sector has also been instrumental in addressing gender disparities in education by providing convenient access to quality education at home. It has leveraged rising internet and mobile device penetration in rural areas to overcome cost barriers and make education more inclusive.
Moreover, the growth of EdTech in India has helped future-proof the country against events like school closures, ensuring continued access to remote learning opportunities for children and young adults.
Despite the current challenges, there are reasons to remain optimistic about the EdTech sector’s role in transforming education in the country. With the right support and a continued commitment to innovation, it has the potential to drive meaningful change in India’s educational landscape.
