Amid funding crunch, edtech startups tread an alternative path to success

It is not all doom and gloom for the Indian edtech sector. The sector has managed to grab headlines as the funding winter made them revisit their growth plans leading to layoffs and other cost-cutting measures.

The likes of Byju’s, Vedantu, upGrad among others were the worst hit as growth fuelled by the pandemic began to slow down and students preferred returning to offline modes of learning.

While bigger firms, which focus largely on the K-12 segment, are going through a tumultuous period, edtech start-ups focused on alternative avenues of learning have managed to not only raise funding but also record impressive growth.

K-12 essentially refers to schooling from kindergarten to the 12th grade.

According to data from Tracxn, a market intelligence platform, investments in the edtech sector took a plunge from $4.1 billion across 322 deals in 2021 to $2.5 billion in 2022 across 164 deals.

Of the total investments in 2022, startups focused on the K-12 segment raised a total of $1.6 billion. However, a large part of the funding was raised by firms offering alternative avenues for learning such as test preparation, higher learning, and online courses, among others.

One such start-up is Sunstone, a higher education company that works with academic institutions in upskilling and providing industry-oriented education to students. The firm managed to raise $35 million in series C funding back in August of 2022.

“We were not affected (by the funding winter) as we are essentially a higher education start-up. As our focus has majorly been on skilling and upskilling, we have witnessed continued growth and demand for our offerings,” said Ashish Munjal, co-founder and CEO of Sunstone.

Founded in 2019, Sunstone offers students a wide range of additional courses to help them with securing jobs. “We work alongside universities and colleges to provide training interventions that are imparted alongside different degree courses,” Munjal said, adding, “Our value proposition is offering services to undergraduate and postgraduate students at over 40 institutes in over 30 cities.”

Sunstone has seen ten-fold growth in the past two years, Munjal revealed. The initial focus of the firm was management colleges but has now ventured into engineering and other tech verticals (professional courses) as well.

“We have a network of over 1,000 recruiters providing 2,000+ job opportunities. With its 100+ hours of job-focused boot camps and 50+ guaranteed interviews, and professional assistance in crafting CVs, we ensure that students get all the help they need for securing a placement. We have a strong presence in 50 institutes in above 35 cities and are a strong company of 700+ employees,” Munjal added.

Leverage Edu, a study abroad platform, is another firm that managed to record impressive growth last year. The company raised $22 million in series B funding in March of 2022, bringing it to a valuation of $120 million.

Speaking about the firm’s growth, Akshay Chaturvedi, founder and CEO of Leverage Edu, claimed that the company executed its fundamentals well. “Our revenue grew over three times while the CAC (customer acquisition cost) had become half in 2021 - resulting in an oversubscribed Series B in March 2022.”

“Since then, revenue has grown by three more times, and the company hit EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) breakeven in November 2022. We continue to tighten our funnel, invest in continuously improving our value proposition, and have more product-led acquisitions,” Chaturvedi added.

The firm claims to have reduced its CAC by over 75 per cent in the last 18 months and recently acquired the Reserve Bank of India’s licence for its financial services vertical for student remittances and education loans, Fly Finance.

“With the introduction of financial services like loan assistance, forex, banking, plus accommodation support, it (the company) is staying with the student much longer in the journey, and delivering well on those outcomes maximises trust,” Chaturvedi added.

Leverage Edu is currently counselling over 250,000 students in a one-to-one format every month. The firm had 130 million students consume its content last year. It works with 580 universities across the world. The company also has over 200 universities paying for its software services which work to streamline their admission processes.

CollegeDekho, India’s largest college admissions and higher education services ecosystem, is yet another platform that is on track to double its revenue in the next fiscal year. The firm recently raised $9 million in funding last month.

“We are a sure-footed enterprise that believes in building a business with strong fundamentals - both financially as well as in terms of the offerings and distribution that we create,” said Ruchir Arora, co-founder and CEO of CollegeDekho. “Our strong financial performance, current growth and future prospects are some of the reasons that our current investors have doubled down on their investment.”

The company grew nearly two-fold, with around Rs 100 crore in revenue for FY 2021-2022. “We are aiming to continue that momentum and double our growth again this year while aiming to also be EBITDA positive. We run a very lean ship with clear revenue and profitability metrics embedded across the company’s DNA,” said Arora.

The firm has counselled over 8.5 million students and ensured over 130,000 admissions since its inception in 2015 across all its platforms, while its platform has in-depth information on over 35,000 colleges and universities.