While funding has slowed considerably in the edtech sector, the reopening of schools and offline coaching centres has hit demand for edtech startups offering K-12 courses.
Upskilling startup founders told ET that they are expecting to clock a strong rate of growth in the ongoing year even as a funding crunch has set in the broader edtech sector.
Despite modest growth projections for the ongoing financial year (FY23), players in the space have taken different paths of optimising to changing adoption of their courses.
Upskilling businesses mainly target working professionals who are either looking to move to a better existing pay scale or be more efficient at their current jobs.
The current flurry of layoffs across technology companies is causing many employees to consider going back to school or taking up courses in management, data sciences and digital marketing, industry experts told ET.
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Though it has become for learners to invest in programmes without job security, enrolments at business schools and other post-graduate programmes have historically risen during recessive cycles.“This was the case during the early 2000s right after the Dotcom bubble as well as after the 2007-2008 financial crisis,” Eruditus CEO Ashwin Damera told ET.
“They (working professionals) are looking at growth in the corporate ladder. With layoffs all around, they are coming back to the class to study for about 3-6 months until the markets clear up and there is scope to grow professionally again,” Sanjay Salunkhe, the founder and CEO of upskilling firm Jaro Education, told ET.
Other players in the space include the likes of Byju’s-owned Great Learning, upGrad, and Eruditus.
A recent study by Great Learning showed only 63% of professionals with 0-3 years of experience and 83% of professionals with over 6 years of experience are confident about retaining their jobs.
ETtechThere is also business from the corporate side flourishing.
ET reported on February 28 edition that large organisations like Larsen & Toubro, InMobi, Vedanta Group, P&G and Castrol are investing heavily in employee skill development, with learning and development annual budgets going up, in some cases, by up to 100%.
Narayanan Ramaswamy, national leader of education and skill development at KPMG India, told ET that multiple factors including digital technologies have been the reasons for reskilling among the existing workforce.
“To have the option of switching jobs, gig workers (freelance coders or digital marketers) need to constantly re-skill themselves to what is relevant and sought-after in the market,” he said.
ETtech
Topline growth
Great Learning is expected to close FY23 with a 45-50% revenue growth rate instead of an initially planned 100%. It has cut down spending and that’s impacted the overall growth rate.
“We reduced our marketing spends, we cut out programmes that are not profitable, we shut them down. These are just rational business decisions. To optimise for growth, you will do things that are not profitable. Whereas when you’re trying to optimise for profitability, then you don’t do those things,” founder and CEO Mohan Lakhamraju told ET.
Great Learning has not hired people in the last six months.
SoftBank Vision Fund-backed Eruditus, which partners with universities in India and abroad for its online executive education programmes, is aiming to grow its revenue by 40% in FY23.
On a bookings basis, Eruditus will close at $420-$430 million from $321 million in FY22, Damera said, adding that the company aims to become profitable by the quarter ended June 30.
“In general, business in the October, November and December quarter for all upskilling platforms did poorly. Funding fell and jobs were starting to get scarce,” upGrad founder and managing director Mayank Kumar told ET.
Kumar said the firm will continue growing in FY23, but it may be in the range of at least 80% this financial year. Its operating revenue went up 108% to about Rs 679 crore in FY22 on a loss of Rs 626.6 crore.
“Employees are going back to the office and are now wondering if they have time for online courses. So, all edtech companies have to work doubly hard to prove product propositions with a lot more focus. Players have simply launched programmes without heed to outcomes,” Kumar said.
upGrad acquired 10 companies through 2020 to 2022, including two in the recruitment space – Wolves India and Rekrut India.
New models
In the meanwhile, new models in the space are seeing a steady state of financials, albeit at a smaller scale. Bengaluru and Mumbai-based Upraised, an early-stage startup, continues to see 70 enrolments every month. It runs a select-users programme for budding product managers who seek to get a job after completion.
“The typical candidate has zero to five years of experience before life gets complicated for most or unlearning gets difficult. I realised a lot of engineers were starting to feel lost, after their traditional degrees, and launched product management as the first vertical at Upraised,” founder and CEO Mona Gandhi told ET.
Upraised has trained students of engineering, finance as well as non-STEM backgrounds such as law and psychology.
The company is backed by angel investors such as Cred founder Kunal Shah, Paytm founder Vijay Shekhar Sharma and others.
Mumbai-based Jaro Education is also aggressively expanding operations as it plans to have 30% of revenue coming from markets like the United States and Singapore.
The company told ET that it plans to close FY23 with Rs 117 crore in revenue and Earnings Before Interest, Taxes, Depreciation, and Amortization (Ebitda) of Rs 24 crore, and grow from over 850 to 2,000 employees by FY24.
In FY22, Jaro Education had a revenue of Rs 104.32 crore.
Investors also remain keen on upskilling.
Last week, upskilling platform NxtWave raised $33 million led by global equity firm Greater Pacific Capital (GPC). Existing venture investor Orios Venture Partners also participated in the round.
Orios Venture Partners managing partner Anup Jain wrote in a LinkedIn post that the fund will continue to ‘double-down’ on upskilling that India needs.
“Unfortunately, edtech became a negative story in the startup ecosystem in 2022 due to stories around mis-selling , misreporting and inflated valuations. In 2023, we must create fundamental value around superior career and learning outcomes and stay on course on governance,” Jain told ET.
Global investors in the space also look forward to investing in innovative ways of capturing the upskilling space.
“We have a number of upskilling companies not only talking about but also actually actively providing courses and training around what do you do when you’re the human in the loop on a chatbot or what do you do when ChatGPT does something,” Deborah Quazzo, the managing partner at US-based GSV Ventures, told ET recently.
Quazzo said there was an opportunity for companies to be innovative and get to scale, even as economic and capital markets headwinds that will dissipate over time, exist in edtech.