With one million schools and 20,000 higher education institutions, India has the third-largest educational system in the world after China and the United States. Education has become a popular goal for individuals from all walks of life because to the common man’s ambition to improve his situation. In India, with growing income levels, the middle class is placing increased importance on education. The past decade has seen the emergence of a vibrant consumer landscape that is positively impacting the growth of many industries, including education.
There is a significant demand-supply gap in India’s education sector. This has piqued the interest of several private enterprises, who have invested in education and training facilities with the goal of equipping job applicants with the appropriate learning. At such a time, the e-learning sector offers possibilities to entrepreneurs and companies that want to leverage the internet. The Indian e-learning market presents interesting opportunities for both big and small players.
The Status quo of the Indian Education Sector
The Indian education system has taken giant strides in the past few decades. The gross enrollment ratio (GER) in primary schools is now at 100 percent and that of secondary schools is 97 percent. There is no dearth of colleges and universities either, with India boasting a whopping 3,700 institutions offering higher education. In fact, it is expected that the number of institutes will increase to 5,000 by 2020.
The Growing E-Learning Environment
E-learning is a recent phenomenon in India. However, it can boast of several impressive milestones that have consolidated its position as a modern educational approach. The growing penetration of mobile phones, cheaper data (4G services) and Internet access has opened up avenues for innovative educational ventures.
Government Initiatives
The Indian government is taking several steps towards promoting the adoption of e-learning in India. The government also promoting foreign investment in the education sector. For instance, e-learning startups are eligible for 100 percent Foreign Direct Investment (FDI) under the automatic route without prior approval from the Foreign Investment Facilitation Portal (FIFP).
New Education Policies
Recently, India has adopted a few new education policies with the aim of increasing access to qualified teachers at all levels. This is expected to increase online training opportunities for students. The new education plan, which was implemented in 2020, aims to strengthen early childhood care, reform the examination system, improve teacher training, and restructure the education regulatory framework.
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According to a report by Google and Accel, the Indian EdTech market is set to reach $3.2 Billion this year growing at a staggering 90% CAGR over the next five years. The total addressable market in India for EdTech is estimated to be around $8 Billion.
With the advent of new technologies, several companies have ventured into the education space and have introduced products that can help students learn better. Such companies are mostly startups that build online training platforms for various courses, including vocational training.
EduKart: This startup provides technology-enabled solutions to students in India. It also offers a wide range of services such as college admission support and test preparation guidance for exams like CAT, MAT, XAT and IELTS.
SmartShift: This startup focuses on skill development and vocational courses. SmartShift helps students get hands-on experience in the classroom by developing their skills through experiential learning.
Infolinks: This EdTech startup enables users to earn money by placing text advertisements on their websites or blogs as an affiliate marketer. It offers services such as website monetization and contextual advertising and is a cost-effective solution for SMEs.
Plancess: This startup provides online coaching services to students who are preparing for government entrance examinations like JEE, NEET, BITSAT, CAT, GMAT, GRE and IELTS. The company has tie-ups with more than 300 coaching institutes and more than 15,000 online faculty members.
EduRaft: This startup is a full-stack EdTech company providing learning management system (LMS) technology that helps educational organizations improve the quality of teaching and learning processes. It offers LMS solutions such as Analytics, Engagement, Research & Retention, Social, Mobile and Digital Marketing.
This is a high-potential sector with huge potential in the education and training industry. You can invest in startups that focus on e-learning, virtual classes, test preparation portals or digital marketing of educational products. Other than investing directly into EdTech startups, you can also consider investing in angel funds or VCs that provide funding to companies operating in the EdTech space.
The Indian education sector has huge investment opportunities if an investor looks into the right sectors. The key industries in this space include training and skill development, online test preparation, e-learning, virtual education courses, vocational training and coaching.
You can invest in EdTech startups that have innovative business models and can bring real value to the education sector. To help you make your decisions, we provide you with insights into top segments in this space:
Online Training & Test Preparation
The online training market is a new but fast-growing segment as students prefer learning via the internet. Online Test Preparation is another area that is growing as a large number of students are preparing for competitive exams such as IELTS, CAT, GRE GMAT and TOEFL.
E-learning & Virtual Education Courses
With the increasing use of technology, e-learning courses are becoming more popular among students. These online educational modules focus on improving skills or developing certain knowledge areas through interactive content.
Vocational Training & Coaching
This industry is expected to grow as a large number of young people are looking for vocational courses and wanting to acquire hands-on experience in the real world. Another area that is seeing increased demand is coaching classes for students who are planning to appear for entrance exams like JEE, NEET, BITSAT, CAT, GMAT and GRE.
You can invest in the education sector by investing in EdTech startups. Other options include vocational training institutes that provide high-quality practical training through tie-ups with reputed organizations or coaching institutes that offer study materials along with courses for competitive exams.
In the past few years, India has seen a rise in the number of EdTech startups. This is mainly due to the growing demand for e-learning options and a need for affordable education—a benefit that emerging technologies provide. For instance, content providers can use technology to reduce their costs drastically.
More than 100 companies are currently operating in the education technology space. A majority of these are local startups while the rest are foreign firms. The EdTech market in India is still at a nascent stage and has immense potential for growth.
The Education Sector Report by Google & KPMG states that 70% of students would prefer learning via online courses rather than traditional methods. This figure is expected to reach 90% by 2020. The report also says that the EdTech market will grow to $1.95 billion in 2020 from $0.8 billion in 2015 at a CAGR of 29%.
The benefits of investing in education startups include a huge market opportunity, high growth rates and multi-fold returns on investment. It is a low-capital intensive sector that can offer returns between 5% and 9% making it an attractive proposition for investors.
India is expected to be the second biggest EdTech market by 2020 with annual revenues of around USD 30 Billion. The education industry in India is expected to witness massive disruption as new technologies such as Artificial Intelligence, Virtual Reality and Augmented Reality are expected to impact this sector drastically.
The Indian education sector is one of the biggest in the world. The country has more than 50 million students aged between 5 and 18 years. The reasons to invest in education include the following:
- Huge opportunities to improve the quality of education in India
- The country has large untapped talent potential with 50% of its population being under 25 years
- Increasing literacy rates, higher enrolment rates and growing incomes will drive growth in this space
- Accounting for 2-3% of GDP with a growing middle class, the demand for private education is also increasing
- Educational startups can offer investors good returns on their capital as there is low competition in this space.