K12 firms: New kid in the $2bn edtech playground

Education technology as a sector has been booming in the past couple of years both in India and globally, with significant interest in the K12 (Kindergarten to Class 12) segment as well.

Data from Tracxn, a start-up data analytics company, shows that Indian edtech firms have raised $5.77 billion in funding in 2021 so far. The overall number was $10.14 billion in 2020. As for market size, German analytics firm Statista estimates the online education market in India will be around $2 billion by the end of this year, significantly up from $250 million in 2016. By 2025, the size of the overall segment would surge to $10.4 billion, says Statista.

While the number of new ventures being launched has dipped in the current calendar year, the quantum of funding has gone up, which clearly reflects the heightened interest in the segment.

Of the total $5.77 billion raised by the sector in 2021 so far, $99 million was raised by K12 education specialists. Data from Tracxn shows that in the past four years since 2018, more than 4,800 K12 edtech start-ups were launched globally, of which 1,782 were from India. Further, while India saw the launch of 155 K12 edtech ventures in 2021 (till October 13), over 800 such start-ups were launched in 2020.

Interestingly, if one looks at edtech ventures that help students with preparation for competitive exams like CAT and JEE as a separate segment, these firms raised $5 billion between last year and the current calendar year. "Edtech has witnessed a boom in funding largely because of the disruption that the pandemic has brought," says Gaurav Singhvi, an angel investor and Co-founder of We Founder Circle.

"The emergence of edtech has made quality education and learning accessible for all irrespective of their language, location or age. Thus, the scale at which this sector can grow looks very promising to investors."

The boom is being reflected in the earnings of these ventures as well. Mumbai-based Expertrons, for instance, has seen its revenues grow 57 times in the past 12 months. The company became operationally profitable this January.

The past few months have seen some of India's large edtech unicorns announcing acquisitions at regular intervals. This has boosted the confidence of both the start-ups and their investors. The belief that there are a lot of inefficiencies in our traditional teaching methods in terms of curriculum and reach has attracted newer ventures and investors to the segment. "The sector is seeing much faster adoption of technology-powered learning and, at the same time, it has witnessed consumer stickiness with very promising revenue streams. We have five unicorns just from the edtech sector and are expecting the number to double in the coming year," says Singhvi.

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