Digging Deeper: India's ed-tech space is more than Byju's

The world is becoming a smaller place each day, and with it, the dreams of children
everywhere in the world are becoming bigger. And edtech is helping them realizing these
dreams.

Moneycontrol Contributor@moneycontrolcom

Due to acute disparity in learning levels caused by social, economic, geographic and other
factors, India may be in the danger of under-utilising or losing out on the untapped capital
of human potential. Education technology (edu-tech/edtech) could play a vital role in
meeting the learning needs of underserved sections of the populace. In this space, the name
we hear loudest is Byju’s, the Bangalore-based company valued at over four billion dollars
(or five, according to some estimates), which raised $540 million from Naspers and others
just last year. It is the fourth most valued start-up in the country. Unacademy, which much
like Byju’s also offers online tutoring to students, has raised 38.5 million dollars to date. Last
year in December, Toppr, another edtech start-up which claims to have six million users,
had raised $35 million led by education-focused investor Kaizen Private Equity.
CollegeDekho has raised upwards of 13 million dollars to date. Even Mukesh Ambani seems
to want a slice of the Indian edtech pie considering he bought a 38.5% stake in Noida-based
start-up Extramarks. Byju’s might have put Indian edtech on the global map, but
increasingly, the space is more than just Byju’s.

India’s education market, estimated to grow to $5.7 billion by 2020, has emerged as a
lucrative opportunity for edtech start-ups and VCs alike. On this edition of Digging Deeper
with Moneycontrol, we will try to understand both the potential of edtech start-ups and the
reasons why some of them have succeeded spectacularly in what was, just a few years ago,
a relatively unexplored field.

Growing interest

A recent Financial Express report cited a study by Karthik Muralidharan of the University of
California at San Diego, Abhijeet Singh of the Stockholm School of Economics and Alejandro
J Ganimian of the NYU Steinhardt School, according to which, incorporation of educational
technology can help accurately assess learning levels and customise pedagogical support to
bridge intra-classroom gaps.

Andhra Pradesh, we are told, is pioneering tech-enabled pedagogy, and as an early-bird

adopter of edu-tech, it will be leagues ahead of other states. The piece said, “The state,
from the current academic year, will be using Personalised Adaptive Learning (PAL), or
software-based assessment of the academic standing of the students in a classroom. PAL
will first assess the student’s comprehension levels and then prescribe targeted learning.
Students will take the test online, and based on their individual reports, remedial coaching
will be provided. Apart from facilitating tailored learning, PAL will also ease monitoring of
impact of remedial classes via dashboards for individual students where teachers can track
progress.”

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PAL is being rolled out in over 2,600 schools in Andhra Pradesh. After tests in 56 schools
proved successful, many schools will engage with PAL via laptop but others will do so over
tablets.

The initiative, as per a report in The New Indian Express, will involve intensive training of
teachers, school administration and bureaucrats, and is expected to impact over 2.5 million
children. Andhra Pradesh is, in fact, experimenting with edtech in a big way.
According to the piece, after introducing QR codes in non-language subject textbooks, the
state is now doing the same for language textbooks for classes VI-X.

The NIE said, “Scanning the QR codes assigned to different chapters, students can access
supplementary video lectures or tutorials. They can also use the QR codes to take quick,
online assessment tests that will help them, their parents and teachers measure their actual
levels of comprehension.

Such an ecosystem surely makes addressing gaps in learning levels easier than the
conventional method, of remedial classes. Also, given boards like CBSE are now increasing
reliance on schools’ own assessment of learning levels, by mandating compulsory internal
assessment for boards, pedagogy propped by technology can be made to deliver more
efficiently.”

At another level, edtech start-ups are benefitting from growing interest not just in India but
also from overseas markets.

Big numbers

The News Minute carried a report recently which spoke about how New Delhi-based edtech
start-up XploraBox raised an undisclosed amount in funding from SucSEED Venture
partners. The four founders of XploraBox include Rishi and Shweta Das, Dhirendra Meena
and Rishabh Gupta. The start-up was founded in 2015. The funds will be used to scale up
and establish overseas presence beginning with North America and GCC countries as it
targets a revenue of Rs 100 crore in 3 years. The other investors to have participated in this
round include Green Shoots Capital, Metaform Ventures LLC, JITO Angel Network, SWAN
Angel Network etc.

And what has Xplorabox been up to? Well, it has come up with a business model that has a
subscription box for learning through play in children. We quote, “The basic objective is to
try and wean away the kids, aged between two and twelve, from TV and mobile and
channelize their attention to other constructive activities. Learning through fun’ is their
mantra, with fun stories and educational activities which are offered through their boxes.
The company has served more than 50,000 customers and dispatching kits to over 500 cities
every month.”

According to Rishi, on an average, children are spending over 3 hours every day in front of
screens and that is impacting their brain development. Xplorabox provides modules to
boost essential developmental skills of the children. The start-up believes that the 50,000

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customers they have serviced so far have reported excellent response and more products
could get launched in the coming months.

The aim is to provide learning aids that can enhance various developmental skills like motor
skills, cognitive skills etc. in children to counter issues like Computer Vision Syndrome (CVS),
unhealthy posture, and increasing cases of myopia (short-sightedness).
The start-up is looking at prospects running into billions with the large population of kids in
the target age group and hopes to tap into more potential markets.

Wider horizons

The edtech market keeps expanding and reinventing itself. In a recent development, Byju's
and Disney may launch a co-branded new app targeting kindergarten to Class 3 students.
The Economic Times reported, “The partnership is in line with Byju’s aspirations to expand
beyond India into other large English-speaking markets such as the US, UK, and Australia.
Disney Byju’s Early Learn, as the service is called, will be a standalone app that is likely to go
live sometime next week. There have been talks that Disney has made a financial
investment into Byju’s, but that has not come through yet, sources said. Apart from using
the name of the Burbank, California-headquartered company, the app will boast of
characters from popular Disney brands such as Cars, Toy Story and Frozen.”
Byju’s has entered into a revenue-sharing agreement with the media company. While the
exact terms of the deal could not be ascertained, it is learnt to be in the range of a 10-15%
revenue share that Disney usually sets.

ET said, “While Byju’s will oversee all content created for the app, Disney is expected to
work closely with the edtech firm to ensure stories are weaved around its characters. Kids
using the app will get to watch video-based tutorials that will feature its popular cartoon
characters. Even though the current deal with Disney is strictly a revenue-sharing
agreement, Byju’s has been in talks with the media giant to explore an opportunity for
investments as well. In March, when Byju’s raised $25 million in funding from General
Atlantic, its valuation jumped to $5.4 billion, making it the fourth most valuable private
Internet company in India.”

Customer acquisition and other challenges

With time, edtech companies are dealing with challenges like growing customer acquisition
costs. A recent ETtech piece addresses this very issue. It points out how India’s fast-growing
educational technology space is now going full steam ahead to build organic user acquisition
channels.

The average cost-per-click on digital channels goes up 5-7% every year organically, but it
could be around 30% year-on-year for edtech since it is seasonal for most players, according
to industry-watchers. Moreover, India suffers from extremely low conversion rates as
courses are often large-ticket purchases.

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The report says increasing cost of user acquisition has forced players like Edureka to acquire
60% users organically through free YouTube videos and high-quality blogs. Still, the
company spends Rs 1 crore every month on digital marketing.

Lovleen Bhatia, co-founder and CEO of Edureka says and we quote, “You can’t win with
Google and Facebook, so you need to find other channels of acquiring customers. For us,
our blog, community and YouTube videos have worked well so far.”

Edureka is also working on an AI chatbot that will advise users on how to build their careers
and Bhatia hopes that the counselling bot, which they are trying to make open source, will
add to customer acquisition.

Byju’s, mentions the piece, a leader in the K12 education sector, is looking at television as it
freezes digital ad spends. The company has begun advertising regionally, with celebrity
endorsers. They have launched campaigns with Mohanlal in Kerala and Mahesh Babu in AP
and Telangana and plan to launch many regional ads in the coming year and their spend on
TV advertising will be roughly 20% of their total revenue. Byju’s reported Rs 1,400 crore in
revenues in the previous fiscal, and is expecting a twofold growth in the current year.
The piece also mentions Simplilearn, another e-learning platform for tech professionals,
which gets 1.5 million monthly visitors on its site, out of which 50,000 convert into
enquiries. Out of that, 10,000-12,000 end up buying its services. Krishna Kumar, CEO of
Simplilearn, says in the piece that 40% of its inbounds are from referrals and another big
chunk from free video uploads on YouTube. It would have otherwise spent $1.5 million each
month on digital channels just to sustain current inbound traffic, he says.

Eruditus, an online executive training platform, says a majority of its users come through ads
on Google, Facebook, LinkedIn and Pinterest. Ashwin Damera, CEO of Eruditus, says in the
article, the cost per lead for its course on Design Thinking, which it does in partnership with
MIT, is $15 in India versus $35 in the US. However, acquiring users in India is more
expensive as conversion rates are five times lower than in the US.

Big players

On an earlier podcast, we had examined the boom in the e-learning business scape in India
and profiled e-learning companies like Vedantu, which in November 2018, had managed to
raise $11 million in a Series B funding round. Vedantu, as is well-known, is an interactive
online tutoring platform where teachers provide school tuitions to students over the
internet, using a real-time virtual learning environment named WAVE, a technology built in-
house.

This brings us to the point we began with. Such technological development initiatives push
e-learning beyond regular pedagogical methods. Companies are making learning sessions
more personalized by tracking the student’s attention span and concept understanding
using machine learning, facial recognition etc.

While trying to understand India’s edtech space, it is worth remembering what a huge
market it is. A joint study by Google and KPMG had estimated that the online education

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sector in India would grow at a compounded annual growth rate (CAGR) of 52% to $1.96
billion by 2021.

The idea that brick and mortar structures are obsolete for expansive learning is at the core
of the e-learning boom in India.

It’s not just Vedantu, but most e-learning businesses including Byju’s and Unacademy
understand the limitations of conventional teaching and learning and the potential of
technology-driven educational models that can reinvent themselves to keep up with the
evolving needs of the students. Technology has undoubtedly a wider reach than brick and
mortar structures and content start-ups can reach up to 200-300 million new internet users
from tier 2 and tier 3 cities.

Just to refresh your memory, Unacademy has raised a neat $21 million in a Series C round
and Byju’s unicorn status as India’s fourth most valuable start-up behind Paytm, Ola, and
Oyo, is only too well known. What is a unicorn in business terms? Well, it is a privately held
start-up company valued at over $1 billion. The term was coined in 2013 by venture
capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such
successful ventures. The brand’s success story is now a Harvard Business School case study
no less.

What are the factors contributing to this boom?

The upsurge in e-learning enterprises could partly be attributed to inexpensive data costs
and the increased access to high-speed internet, and with half a billion more Indians
expected to be online for the first time in the near future, there is no reason to think small.
Some other big dreamers in this space are Meritnation, Cuemath and Toppr and Byju's is a
success story to emulate for many.

Mint has reported and we quote, “Byju’s is part of a small but growing number of tech start-
ups that have rapidly grown their businesses and consistently attracted blue-chip investors.
In July 2017, Byju’s raised about $40 million from Tencent Holdings Ltd, months after raising
$30 million from Verlinvest. Since starting out in 2008, Byju’s has raised over $240 million
from Tencent, Verlinvest, Chan Zuckerberg Initiative, Sequoia Capital, Lightspeed Venture
Partners and Aarin Capital, among others.”
Quality education is not equally dispersed in India and that has fuelled the need for e-
learning modules. Roman Saini, co-founder and chief educator of Unacademy had written in
Hindustan Times on November 8, 2018 and we quote, “The education divide in India with
respect to quality and accessibility has existed for far too long. It is difficult for the existing
physical infrastructure to meet the learning needs of the burgeoning population of our
country which will touch 1.5B by 2030 and 1.7B by 2050 (equal to the population of China
and USA combined). Digital is gaining acceptance across numerous sectors and it is only
right that the education sector too reaps benefits of this digital transformation.”

There are barriers created by inadequate infrastructure, concentrated content and language
issues that prevent large numbers of knowledge-hungry demographics from the benefits of
a global education.

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As he says, “It is impossible to have great teachers in each and every village/district in India.
Similarly, the best teachers should not be restricted to certain institutes of the world. This is
where e-learning comes in. It can level the playing field for all students. Students, in both
rural and urban areas, can get access to the best learning resources, learn at their own pace
and in the comfort of their own homes. Another key advantage with e-learning is that it is
much easier to design courses with the latest online reference material than publishing
crores of books.”

The possibility that online education could benefit India’s youth, that forms more than 50%
of the population, is exciting for e-learning entrepreneurs, educators and potential learners.

New methodologies

E-learning predictably expands the scope, depth and reach of information with interactive
tools, AI and technology as well as live online interaction.

Byju Raveendran believes e-learning can develop and inculcate personal initiative in
students and that bodes well for their future success as opposed to the “spoon feeding”
that conventional education dispenses.

He told Mint in April 2017, that even when he was not an education entrepreneur, he was
known for pre-exam hacks and shortcuts that made him an exceptional student. After
nailing a perfect score in CAT twice, and after turning down interview calls from all the
Indian Institutes of Management (IIMs), and working abroad for a couple of years, he
decided to take six months out to see what would happen if what he had learnt was taught
with a structure.

So successful was his module, recalls Mint, that Raveendran started conducting workshops
on the weekend, with the classes growing in popularity. When one classroom wasn’t
enough to accommodate students, he booked an auditorium with a seating capacity of
1,200. From jet setting across India to teach, he decided to take his modules to students and
a success story was born in 2011.

At the core of his teaching module and business model is not derivation but independence,
logic and life skills. Soon he started using a video format. As Mint informed, his high-
production-value videos and content caters to the K-12 (kindergarten-Class XII) segment,
with more than 500 members in the research and development team.
Mint also reported that there are about 20 million children between Classes VI and XII in
India who have access to the Internet and take private coaching classes, which translates to
an addressable market opportunity of about $2.5 billion, according to research by consulting
firm RedSeer Consulting. Not surprising then that since launching in 2015, the Byju's app has
had more than six million downloads. The number of people who buy its premium service is
growing every month, claims the firm.

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What also benefits the company is that a student starting young with Byju’s will possibly
continue with the company and it is then looking at a four-year or seven-year timeline with
the same user.
Byju’s has also designed personalized learning through what it calls a “knowledge graph.”
The app learns which concepts a student may need more practice at, and adjusts learning
plans accordingly.

Raveendran also told Mint and we quote, “Our product and go-to-market are both targeted
at students. B2C is our only channel. We’re not trying to change the system. It can easily
coexist with the system. It’s not a replacement of teachers.”

Byju’s dream is to take education deeper and try and bridge India’s rural and urban divide
and to create a learning culture where students learn and not just memorize. And develop a
life-long thirst for knowledge that was earlier restricted by the fear of exams. The Byju’s
smartphone app—and portal apart from offering study material for classes 4-12, also offers
help to succeed at competitive exams like JEE, NEET, CAT, IAS, GRE and GMAT.

The positively disruptive force of e-learning

A Sunday Guardian piece by Priya Singh about just how digital technology has proved to be a
disruptive force for the education sector in India and has changed the old paradigms of
teaching.

She wrote, “According to this new model of education, driven for the most part by digital
technology, the teacher is sidelined, as content—as learning—takes centre stage.”
She also cites Byju’s success to prove her point, and mentions the numbers that deserve to
be repeated here. The platform now has over 22 million registered users, 1.4 million paid
subscribers, an addition of 1.5 million registered users every month, more than 100%
growth and the pride of becoming the first Asian company to get investment from the Chan
Zuckerberg Initiative, the philanthropic organisation founded by Facebook’s boss Mark
Zuckerberg and his wife Priscilla Chan. And all this was achieved in just three years.
The possibilities of learning online are inexhaustible and Coursera, a California-based online
learning platform that offers certified courses from the world’s best universities—including
Yale, Princeton and Stanford—has been adding rapidly to its subscriber base in India.

Raghav Gupta, Director, India and APAC, Coursera told Sunday Guardian, “India has a lot to
gain from online learning. About one million people enter the workforce every month with
no guarantee that they will have the competencies to succeed in jobs of the future. Even as
technology renders many skills obsolete, online learning will be the transformative force
that empowers millions to acquire new skills. We see this trend reflected in our growth in
India. We now have 3.3 million Indian learners on the platform, while adding 60,000 new
users every month. Our platform is giving employers and professionals the much-needed
opportunity to access the best and most relevant content the world has to offer and learn
the skills needed to compete in the new economy.”

Another big player, says the piece, is edX, a “massive open online course” (MOOC) platform,
founded by the Massachusetts Institute of Technology and Harvard University. It offers

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courses on subjects like artificial intelligence, machine learning, data science, business and
management, leadership, soft skills, and so on.

And not just students but teachers can benefit from e-learning by referring to online courses
taught by world-class professors and adopt flip-learning pedagogy.

Observers and most e-learning businesses agree though that classroom learning cannot be
replaced but it can surely be updated.

The piece quotes Divya Gokulnath of Byju’s, “Technology has played a key role in disrupting
this sector and will continue to shape the teacher-student relationship by offering better
accessibility, distribution and formats of delivery.”

The dream of learning from a Harvard professor in a small Indian town, no longer seems
impossible and the chalk and talk module may be in for a long-term overhaul. The world is
becoming a smaller place each day, and with it, the dreams of children everywhere in the
world are becoming bigger. And edtech is helping them realizing these dreams.

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