Earlier this month, Byju’s—the lone unicorn in Indian edtech—hit a massive milestone. In a press release, the company announced that it had turned profitable, achieving a net profit of Rs 20 crore ($2.8 million) on revenues of Rs 1,341 crore ($187.7 million). Over the past decade, Byju’s, its purple and white logo, and its ever-expanding arsenal of teaching tools have become synonymous with India’s edtech scene. Circa 2010, however, there was a very different sheriff in town—Educomp.
Rise Of The Firm
Today, Educomp is a withered husk of its former self. Its market capitalisation—a grand Rs 7,000 crore ($980 million) in 2009—has shrunk to Rs 11.63 crore ($1.6 million). It filed for bankruptcy in 2017 as its debt ballooned into thousands of crores, and there have even been allegations of fudging company financials.
Before its fall from grace, however, Educomp was India’s great edtech hope. Its approach was to kit out classrooms with hardware and multimedia learning modules. And it saw some serious traction, as The Ken’s Rohin Dharmarkumar, writing for Forbes India at the time, pointed out:
“Educomp’s services (multimedia content, computer labs, teacher training) reach 23,000 schools and 12 million students and teachers. The company has grown at a compounded rate of over 100 percent over the last five years, making 20 paisa of every rupee earned as pure profit.”
Interestingly, it wasn’t a flaw with Educomp’s core proposition that would prove its undoing. Instead, it was the company’s overreaching. As Educomp began offering financing to schools to buy its products and began setting up educational institutions as well, the company ended up taking on a whole load of debt.
Ordinarily, one might assume that a like-for-like competitor would fill the vacuum left by Educomp. And in a way, it did. India’s edtech space has changed tracks altogether. Where hardware was once king, companies in the space realised that software was the big opportunity. However, Byju’s—the heir to Educomp’s throne—bears much of its predecessor’s aggressive traits. It, too, has aggressively acquired companies and gone the financing route as well.
With the Indian edtech space expected to reach ~$2 billion, according to a report by professional services firm KPMG and search giant Google, there has been an explosion of companies in the space. According to one estimate—over 4,500 edtech companies launched between January 2014 and September 2019. While many of these languish in unfunded obscurity, some—such as Vedantu, Unacademy, UpGrad, and others—are expanding the frontiers of Indian edtech. And a lot of this goes back to Byju’s.
A Paradigm Shift In Indian Edtech
Byju’s was born in the first decade of the current millennium. However, in its original avatar, it was just a chain of coaching centres for the CAT (Common Admission Test, a national-level management entrance examination conducted by the Indian Institutes of Management).
Byju’s as we know it today—the online tutoring and edtech behemoth— gradually came into being around the turn of the current decade as the company increasingly realised the digital opportunity. As we wrote in our 2017 story:
“It changed to offline plus online videos of teachers taking test prep classes. Then it changed to completely online videos and weekend doubt-clearing classes. Then it put the test preparation business on auto-pilot and ventured into a learning app for students in grades 11 and 12. It started with mathematics and physics and soon added chemistry and biology. Fast forward, Byju’s has added courses for more grades; Grade 9 and 10, 8, 7, 6, 5 and very recently, 4.”
Unlike an Educomp, Byju’s put its faith in software. Cheaper and easier to scale, it would allow them to, quite literally, put their educational material in the hands of customers.
As internet data prices have crashed and mobile phone penetration in the country has skyrocketed, Byju’s app-based approach has reaped rich dividends. Through its interactive learning modules and with an aggressive sales strategy, it now boasts over 40 million registered users. Its services span the gamut from grade 1 (Byju’s even has a content tie-up with media conglomerate Disney) to test prep for civil services exams.
Byju’s success hasn’t just encouraged other players to enter the space, it also renewed investor confidence in the sector. Consider this: the $130 million Byju’s raised in 2016 was 81% of the overall investment into Indian edtechs.