10

big story
MAY 22-28, 2016

Learning
Curve
The opportunity for tech-enabled
startups in education is huge as are
the challenges of scalability and viability

:: Rahul Sachitanand

n March 2015, Embibe, a company providing customised learning solutions, decided to make what appeared to be a foolhardy move. At a time when startups
were racing to squeeze out more revenue
from their business, it seemed to head in
the opposite direction. After charging
`12,000 per user for its online education
content, it decided to make its content
available for free and instead focus on improving personalised learning outcomes.
The startup, backed by Kalaari Capital
and Lightbox Ventures, eschewed fresh
funding and unfettered growth and decided to strengthen its business by pushing users to pay for better outcomes. In
this case, it was via what it called personalised score improvement, by looking at
three key parameters: behaviour or commitment, test-taking skills and knowledge
of candidates.
Embibes founder Aditi Avasthi says the
company is using growing capabilities in
data analytics to go against conventional
wisdom and entrenched offline and online competition and try to recast the
focus of the test-prep industry. From a
zealous focus on inputs (massified, generic content and questions for candidates), Embibe wants to make more aspirants successful in tests. Education technology, or edutech, is predominately an
inputs-focused business, with little attention to the output or end result from using
all this technology, she says.
Avasthi has led the hiring of senior
management from companies such as
Flipkart and McKinsey to add muscle to

Vamsi Krishna,
Anand Prakash
and Pulkit Jain
cofounders, VEDANTU

Founded in: November 2014

Funded by Accel Partners

and Tiger Global
Management

N Narasimha Murthy

Despite her bombast, Avasthi and her

peers in this space are quick to admit that
it is very difficult to build scale and stickiness in this market. Not only do they have
to compete with offline rivals for the attention and money of different pieces of
the education ecosystem (students, parents, teachers, schools, government),
they also have to deal with a flood of free

Is a market place for online

tutoring and prep for
competitive exams

Has 35,000 registered

users and 300-plus
teachers on the platform,
forecasts growth of 25-30%
month-on-month

There has been

New Deal
Magnet

little technology
disruption in
this segment

$115.7M

Deals and
investment
in edutech

49

Vamsi Krishna

$77.6M
Embibes new business model and says
the firm can provide a 60% improvement
on scores in over 10 tests. She points to an
IIT-Madras student who used the platform before the Joint Entrance Exam to
discover that he wasted precious time on
41 questions he didnt even answer. We
will soon launch a score-improvement
guarantee programme for our candidates, she boasts. We are basically selling them morphine.

32
Deals

25
Funding

$25M

$28M

2013

2014

15

2015

2016
(YTD)

Source: Traxcn

OBSTACLES APLENTY IN EDUTECH...

Business is slow to materialise from schools since
most of them have a
limited budget and there
are multiple stakeholders
to seek approvals from

Plenty of teaching
material is available
for free; it is hard to
convince users to pay for
additional value

The industry
T
is highly
ffragmented
and hard to
a
aggregate

Slow initial
growth means
risk capital investors
who back startups
in other sectors
could be wary of
edutech

content that is available online. There

has been little technology disruption in
this segment, says Vamsi Krishna, cofounder of Vedantu, an online marketplace for tutoring and test prep, funded
by Accel Partners and Tiger Global.

Free vs Paid
Convincing those who use free content to
pay for value-added material is hard according to industry estimates barely 2-3%
make this switch while the rest elude the
grasp of edutech companies. Unlike
other segments, education ventures need
time to incubate and organically grow,
says Shantanu Rooj, cofounder of Schoolguru, a provider of online courses to universities.
Funds are required to grow these businesses, but risk capital investors remain
guarded on the prospects of companies
in this sector. Startups need to work
hard to build trust as education brands,
says GV Ravishankar, managing director,
Sequoia Capital India Advisors. This will
take time. Startups should not expect that
the best tech alone is sufficient to win the
market. They need to focus on delivering
on the promise of better outcomes for
students.
In March, Sequoia led the investment
of $75 million in Byjus, an online person-

Dislodging
old-school,
offline
competition has
been hard and has
taken longer than
expected

11

big story
N Narasimha Murthy

MAY 22-28, 2016

Krishna Kumar
cofounder, SIMPLILEARN

Founded in: August 2012

Funded by Kalaari
Capital, Mayfield Fund
and Helion Capital

Piyush Agarwal

Provides short-term,
online certification courses
for working professionals
to upgrade their skills

founder, SUPERPROFS
Founded in: January 2014

Funded by IDG Ventures

and Kalaari Capital
alised learning tool started by Byju Raveendran, a former CAT topper who used to run a
successful chain of offline tutorial centres,
before knuckling down to take his business
online. While ventures such as Embibe and
Topper (funded by Fidelity Partners, SAIF
Partners and Helion Capital) focus on students preparing for tests, Raveendran thinks
theres a bigger market to be tapped among
students looking to improve their learning
through the academic year and beyond.
Technology is playing a big role in making
learning interesting, he says. With the
smartphone as the access device, we have
more than half of our users from outside the
top 10 cities. With over 1,20,000 paying students on the app, which was launched in Au-

Has trained 5,00,000

people so far and is
adding some 20,000
every month

Is an online tutorial platform

for government jobs

Has 4 lakh students enrolled

with it and 200 professors
imparting lectures in Hindi
and English, with early
pilots in regional languages
such as Telugu and Tamil

There is an
opportunity to
build a global
education platform
from India

Offline providers dont

have the technical
know-how to migrate
their large businesses
online

We want to create a habit of

autonomous learning for Indian students

Byju
Raveendran

gust 2015, Raveendran and his team of 400

technologists, teachers and content developers want to move away from Indias traditional focus on rote-learning.
We want to create a habit of autonomous
learning for Indian students, he says. Despite these claims, Byjus has not made a huge
dent in the market it plans to have at least
3,00,000 paid users on the app in a year, in a
country with over 250 million students in the
K-12 system.

Live Classes
Others such as Krishna of Vedantu are betting
on the use of technology to disrupt the way
teaching and tutorials are delivered. In its attempt to recast this business, Vedantu provides a live tutoring platform for students
and teachers (not just trained teachers but
anyone an engineer, a homemaker or a retired senior citizen who has time to spare)
to take a few classes.
Instead of a fixed salary that teachers get in
the offline world, the online tutors decide on
the hours they work and the syllabus they
teach and get wages accordingly. This means
teaching can be for as little as 15 minutes or
can be booked for an entire semester. Vedantu provides teachers with tools that enable
them to create and share content, says Krishna. Users can either buy a monthly package

founder, BYJUS
Founded in: April 2011,

launched app in
August 2015

Funded by Sequoia
Capital, Sofina
Is a personalised
learning-solutions
provider

Has 1,20,000 paid

users on its
platform and
adding about
20,000 every
month

or purchase bulk hours. We have 300 teachers on Vedantu from over 200 cities and
towns in India, he says. We have 35,000
students who have completed over 70,000
hours of live sessions. As the model gains
more traction, Krishna sees the business
growing at 25-30% month-on-month.
When it comes to education, startups
arent just targeting the K-12 herd. As the need
for education spreads from preschool to employees who want to be trained and retrained by experienced professionals, companies are devising business ideas to keep
pace. For example, Nayi Disha, a developer
of educational computer games for preschoolers, was founded by college mates Kartik Aneja and Kushal Bhagia to provide a new
medium of motion-based learning for children.
Inspired by the educational CDs that they
watched as children, the duo have devised
games that are used in over 100 schools today. With early funding from private equity
veteran Ajay Relan, among others, Nayi Disha
should be in 300 schools in a year, says Aneja,
but they have no illusions about the rough
road ahead.
Selling to schools can be quite tricky, he
admits. Since multiple stakeholders are involved, it is difficult to evaluate who takes the
final decision. While Nayi Disha benefited

N Narasimha Murthy

...EVEN IF THE OPPORTUNITY IS MASSIVE

Over 14 lakh schools in
K-12, with 25 crore students enrolled, according
to Ernst and Young

78% off engineering

graduates are unemployable, says a study
by assessment firm
Aspiring Minds

There are
3 crore
aspirants for
government
jobs

Nearly 10 lakh
applicants for civil
services exams

12 lakh students
took JEE Main
exams in 2016

12

big story
MAY 22-28, 2016

Aditi Avasthi
cofounder, EMBIBE

Kartik Aneja
cofounder, NAYI DISHA
Founded in: November 2012

Funded by Ajay Relan

Is a developer of educational
computer games for
preschoolers

Has signed up with 100

schools and claims it can
reach 300 schools in a year

Selling to schools can

be quite tricky since
multiple stakeholders
are involved and it is
difficult to evaluate
who will take the final
decision
from getting an early customer and product
votary in Swati Vats, president of Podar Education Network, the founders have yet to put
in the hard yards to convince potential customers, even as they keep a wary eye out on
potential competition. Edutech can quickly
turn into a feeding frenzy, because every
competitor can devise a me-too product,
says Aneja.
At the other end of the spectrum, companies such as UpGrad and
Simplilearn are targeting
working executives who
want to upgrade their skills.
Simplilearn started as a
blog before it evolved into a
venture to provide mid-career training in new technologies such as big data,
cloud, IT security and digital marketing.
The firm, backed by over
$27 million from Mayfield
Fund, Kalaari Capital and
Helion Venture Partners,
has trained over 5,00,000
people thus far and expects to train 3,00,0004,00,000 people annually.
Uniquely, Simplilearn isnt an India-only
business. The firm has studios in the US to
build its content and is eyeing expansion both
in India and overseas. We have become a reliable source for working professionals to
reskill and upskill themselves, says Krishna
Kumar, CEO and cofounder, Simplilearn.
There is an opportunity to build a global edu-

Founded in: November 2012

cation platform from India.

As demand grows, Kumar and Co are
tweaking the ventures business model to
keep pace. For instance, Simplilearn offers
courses in subjects such as big data, where a
professional can take a clutch of online
courses and get professional certification
once she complete the programme. Elsewhere, the type of content is moving from
purely self-learning modules to live classes,
even as the company goes beyond IT-related
courses and adds a few in the fields of sales,
finance, human resources and project management to its portfolio.

Funded by Kalaari
Capital and Lightbox
Ventures
Is a personalised learning
and education platform

20 lakh students visited

the platform, expects
20-30% month-onmonth growth

Edutech is
predominately
an inputs-focused
business, with

On the Job
It isnt always easy to zero in on a business
plan while building an edutech venture. Just
ask Piyush Agarwal, CEO of SuperProfs, a
provider of online coaching for competitive
exams, especially for government jobs. The
company has been through at least five iterations, from trying to capture classes and
making the videos available for later viewing
at institutes such as IITs (something he saw at
Stanford) to developing high-definition content and transmitting it on low-bandwidth
network for schools.
Finally, Agarwal decided to target the millions of applicants for government jobs. He
estimates that there are about 50 lakh applicants for jobs in Central and state governments. SuperProfs, which has almost 200
teachers in English and Hindi with more being hired in vernacular languages, hopes to
make a dent in this market.
We want to be the online market leader
for people preparing for government jobs,
he says. In doing this, the company, backed
by IDG Ventures and Kalaari Capital, is going
head-to-head with old-school, offline training institutes, which not only have a larger
volume of students but, arguably, a stronger
brand. Agarwal, however, is unfazed. Offline providers dont have the technical
know-how to migrate their large businesses
online, he says.
There are others that want to take a crack
at the government jobs market. IIT-Bombay
graduate Ashutosh Kumar, who started Testbook three years ago, thinks there is a massive opportunity in this segment but worries
that there are no success stories to emulate. No one has
proven that you can make
money in the edutech market, he admits. We think
graduate students (with better purchasing power) are a
more viable target than high
schoolers trying their luck
with exams such as JEE.
To this end, Testbook
claims to have racked up
5,00,000 users who have
solved some five crore questions on the platform. In a
sign that offline ventures
want a piece of this market,
textbook publisher S Chand
took a significant stake in
the firm, which was backed early on by Shanker Narayanan, a veteran private equity investor, and LetsVenture, a funding platform
for startups.
By the end of this financial year, the
number of users should grow from 5 lakh to
14 lakh, claims Kumar. Based on a freemium model of allowing limited free access,

little attention to
the output or
end result from
using all this
technology
B H A R AT C H A N DA

Shantanu Rooj
cofounder, SCHOOLGURU
Founded in: August 2012

Funded by family offices

of HNIs
Is a provider of online courses
to Indian universities

Has exclusive tie-ups with

14 universities across 10
states, with 150,000
students using its platform;
by end of 2016, this number
is expected to hit 500,000

Unlike other segments,

education ventures
need time to incubate
and organically grow

Away from the

consumer side
of the market

B H A R AT C H A N DA

some edutech
ventures are
also helping with
the backend of
the business and
showing strong,
if slow, signs of
growth

Testbook converts barely 6-7% of its user

base to paid subscribers. Even if this is almost double the industry average, it will be
some time before Testbook can become a
meaty business.

Lessons for Universities

Away from the consumer side of the market
those writing exams or looking to reskill
some ventures are also helping with the
backend of the business and showing strong,
if slow, signs of growth. Rooj of Schoolguru,
for example, helps universities take their
courses online, with a special focus on digitising the paper-based content handed out to
distance-learning students.
Globally, distance education has transformed and we want to help Indian universities keep pace, says Rooj. We provide them
with the tech platform, including audio and
video content, to make this transformation.
Schoolguru currently has exclusive tie-ups
with 14 universities across 10 states, with several more in the pipeline, according to Rooj.

13

big story
MAY 22-28, 2016

No one has proven that

you can make money in

the edutech market

Education Needs an Upgrade

Technology can be the big disruptor in education, helping students,
teachers and administrators achieve better results
:: Ashish Dhawan and Namita Dalmia

Ashutosh Kumar
cofounder, TESTBOOK
Founded in: April 2013

Funded by S Chand, Shanker

Narayanan and Utsav Somani
Is an online content provider to
prep for competitive exams

Claims it has 5 lakh users and

sees this increasing to 14 lakh in
12-18 months

We provide instruction in 10 regional languages, he says. Now, we are looking to

expand this business. We have signed our
first pact in Africa and are being approached
by universities in nearby countries too. Rooj
is thinking big for his business; in five years,
he expects five million students to use his
platform and expects revenues to touch
$250-300 million.

Scope for Improvement

Harman Singh, founder of WizIQ, meanwhile, has built a software platform where
students, colleges, universities and test-prep
companies can interact. The firm has over
5,000 service providers and about five million students using its platform. The business
is expected to double every year from now,
according to him.
Two years ago, WizIQ got over 85% of its
business from outside India, but in 24
months it should get 40% of its sales from
here. The Indian market is highly fragmented, with not one provider owning more than
2-3% of the market, he says. A platform like
this allows you to consolidate these service
providers.
At the end of the day, both investors and
entrepreneurs are betting on the long-term
potential. Says Ravishankar of Sequoia: The
promise of technology is to make high-quality education available at affordable prices, at
scale. This is the promise that investors are
backing and hopefully we will see several
valuable companies built in the education
sector over time. 

hree key issues that are plaguing school education are a large learning gap in children, ineffective educators and poor accountability. Children
in Class V cannot read Class II textbooks or do
simple division. Our nine million teachers are deprived of rigorous and relevant opportunities to grow and apply best practices. Lack of authentic data leads to poor decision-making at
all levels. In order to disrupt the education field, we need policy reforms and technology solutions that will make higherquality solutions available at scale.
With digital learning solutions that focus on providing conceptual clarity and individual practice time, teaching and
learning in India can move from being largely rote-based to
deeper, personalised learning. Leveraging the growing use of
smartphones, new development opportunities can be created
for teachers to learn from experts and peers. This will help
them go beyond their confines of classrooms or textbooks as
the only source of teaching-learning material. Just like in other
industries, collecting and analysing data in real time can resolve slow and ineffective decision-making in education.

The Disruptor
Technology has a huge potential to disrupt the education
space in all three categories: (i)
students preparation (ii) educators effectiveness and (iii)
administrations efficiency.
Personalised tools help students learn and progress at
their pace. Such tools, when
integrated with the classroom, allow teachers to track
the learning data of each child
and provide individual intervention. There is also an increasing use of self-learning
solutions, which are supplementing or substituting afterschool tuitions especially in
higher grades or for test-prep.
Tools that provide intensive
learning, cater to diverse
learning needs and enable
easy discovery can truly disrupt education.
Blended training programmes combine online
learning with in-person or virtual facilitation, peer learning
and one-to-one coaching. By
linking such programmes to
different competency levels,
there is a potential to create
individual professional development paths for educators.
There is also a latent demand in the teacher community for high-quality, bitesized curricular resources,
such as activities and worksheets, that they can use in
classrooms. Several teachers
are already on online communities, even WhatsApp
groups, exchanging knowledge and information. These
trends show how disruptive
models can be created for
teacher development.

Administrators are also increasingly looking at tech-based

solutions to bring operational efficiency. State-level systems
are adopting MIS (management information systems) that allow them to track individual child-, class- and teacher-level
data. School principals are adopting mobile apps for better
communication with teachers and parents, and improved collaboration among the staff.

More than Profit

Even though education is called a multi-billion dollar market,
the core of school education is still non-profit. Government
school market is difficult to monetise and the highly fragmented private school market makes distribution cumbersome.
Apart from textbook publishers, other for-profit organisations
have not been able to successfully scale. In the last decade,
smartboards have tried to penetrate the market but have seen
very moderate success. The direct-to-learner model is yet to
make its mark.
A critical mass of schools caters to low-income segment
where markets do not make sense and hence there is a larger
need for scalable, non-profit
models driven by philanthropy. Education is at an interesting inflection point with a lot
of positive momentum in political and bureaucratic leadership. Today, several key initiatives are housed at the level
of the ministry of human resources development. Many
state governments such as
Delhi, Rajasthan, Andhra
Pradesh and Maharashtra
have also been proactive
about strategic reforms.
There is also growing enthusiasm about using technology
to rethink education delivery
at all levels.
However, we still dont
know how best to utilise technology. Infrastructure is improving with government and
commercial interventions,
yet there isnt sufficient penetration in schools. For example, effective student interventions would need 5:1 student-computer ratio in
schools and high-speed internet connectivity. We are nowhere near such infrastructure in our schools. We also
need to invest more in research and development of
free, open-source digital solutions that will truly disrupt the
education field.

Even though education is

called a multi-billion dollar
market, the core of school

education is non-profit. There is

a need for scalable, non-profit
models driven by philanthropy

Ashish Dhawan is founder of

Central Square Foundation,
and Namita Dalmia is
its associate director