Indian Edtech in 2022 Building in the Shadow of Giants Blume Ventures | December 2022 Introducing Blume Blume Ventures is getting bigger with each fund cycle We are presently investing out of our fourth fund, and our typical cheque is ~$1 - 2M with a reserve of ~$3 - 4M. We are sector agnostic tech investors: from AgriTech🌽 to SpaceTech🚀 Fund Size Vintage Primary Cheque Reserves # of Investments Key Investments Fund I & Opportunity Fund Fund II & Opportunity Fund Fund IV Fund III $15M + $6M $60M + $40M $102M $250+M 2011 - 2014 2016 - 2018 2019 - 2021 2021 onwards $100K-250K $250K-500K $750K-2M $1M - $2M $750K $2M $3-4M $3-4M 74 49 26 ~30 (Ongoing) Blume’s take on edtech and skilling has evolved over the decade eCommerce for school supplies SaaS enabled marketplace for tuition centers and their students K-12 supplemental learning platform (Acquired, 2020) Test prep for government exams (Acquired, 2019) Enhancing STEM outcomes for higher education Communication app for schools Foreign admissions enablement platform L&D and assessments platform for employers (Acquired, 2018) Unacademy becomes the first unicorn in the Blume portfolio Leader in online test prep: India’s 2nd most valued edtech company Campus placement and hiring platform (Acquired, 2021) Skilling and hiring After-school tuitions community for developers marketplace 2011 2012 Thesis: Distribute B2B2C via schools & colleges. 2013 2014 2015 Thesis: Solve for students taking competitive exams and interviews → Discovered high willingness to pay here. 2016 2017 The Jio explosion. Cheaper smartphone devices (<10k Rs) & cheap 4G data → online learning TAM expanded. 2018 Vocational upskilling platform for women 2019 2020 COVID-19: Formal education moved online. After-school learning became critical. Blume details out key opportunity areas and trends in the 2020 Edtech Thesis. 2021 Thesis: Export of edtech services, gamification, 21st century skills for kids, and verticalized upskilling are key themes. Last 24 months in edtech What’s changed in edtech since 2020? The last 24 months have been the most pivotal for the Indian edtech space since the Jio revolution in 2016 that brought online learning to students’ mobile phones in the most remote corners of the country. Here’s a quick look at what changed in the last 24 months and how that impacts students, teachers, edtech businesses, and investors. 1 COVID-19 had a larger impact than expected 2 Indian edtech started seeing global traction 3 Newly minted giants started an M&A spree 4 China’s edtech crash sent global shockwaves 5 COVID-19 effects wearing off, hybrid resumes 1a/ COVID-19 had a larger impact than expected 1/ COVID impact 2/ Global traction What happened? 3/ M&A spree 4/ China edtech crash Which led to… 5/ COVID effect tapers So what? 1 Schools and colleges moved online Schools needed tools to support online operations and training for teachers Large opportunity for B2B platforms catering to schools / teachers 2 Offline after school tuitions / hobby classes were COVID hit Demand for online learning grew and offline tutors tried to teach and sell online Large opportunity for online B2C players and B2B catalysts 3 Daycare centers and preschools closed, especially as kids remained unvaccinated and vulnerable Parents needed alternatives for daycare, especially as offices restarted WFO New opportunity for hybrid daycare and online learning for pre-K12 kids 1b/ COVID-19 had a larger impact than expected 1/ COVID impact 2/ Global traction 3/ M&A spree 4/ China edtech crash 5/ COVID effect tapers COVID-19 forced schools and colleges to adopt technology and will leave behind ‘digital traces’, thus creating a new large opportunity in B2B/2C edtech. COVID-19 was for B2B edtech, what Jio was for consumer apps Offline models of education emerged Offline test prep like Akash and FITJEE became large. Online models struggled due to low mobile internet penetration. Online B2C edtech grew rapidly 2016 B2B models saw low technology adoption and tough sales cycles, whereas B2C online edu grew with viral adoption and high engagement. 2020 Lockdown pushed schools and colleges into sudden closure → old school, digitally un-savvy institutions came online. 1c/ But, we’re now seeing education move back to “normal” 1/ COVID impact 2/ Global traction 3/ M&A spree Need for daycare and social development drive core learning offline 4/ China edtech crash But, digital traces will remain in peripheral services around core learning ADMINISTRATION Admin jobs like records, counselling, performance tracking, etc. COMMUNICATION Three way communication: students <> teachers <> parents 5/ COVID effect tapers EXPERIENTIAL LEARNING & REVISION Revisions, doubt-solving, learning-by-doing, etc. CORE EDUCATION goes back offline HOBBY AND CO-CURRICULAR LEARNING 2pm to 5pm slot in the student’s schedule: dedicated to post school learning. ASSESSMENTS Quizzes, homeworks, non-competitive exams for students; and grading for teachers. 2a/ Edtech startups were able to gain traction globally 1/ COVID impact 2/ Global traction 3/ M&A spree 4/ China edtech crash 5/ COVID effect tapers USA Middle East Canada *Maps not to scale 2b/ Edtech startups were able to gain traction globally 1/ COVID impact 2/ Global traction What happened? 3/ M&A spree 4/ China edtech crash Which led to… 5/ COVID effect tapers So what? Higher demand, faster growth, larger funding $ for platforms that were earlier seen as niche premium markets Indian Edtech startups expanded abroad and acquired paying customers in North America, SEA, the Middle East TAM for spaces that were earlier considered niche effectively expanded to account for global demand and higher ARPU Indian edtech attracting capital from global investors → increasing overall pool of capital and increasing valuations 3a/ Large edtech companies became even larger 1/ COVID impact 2/ Global traction 3/ M&A spree 4/ China edtech crash 5/ COVID effect tapers 3b/ Via inorganic growth… 1/ COVID impact 2/ Global traction 3/ M&A spree 4/ China edtech crash 5/ COVID effect tapers 2020 saw edtech giants licking the cookie in several adjacent spaces and spur large scale consolidation via acquisitions, especially in K12. * * BYJU’s acquisition of Aakash Education is the largest edtech acquisition in the world by a VC backed company at $1Bn 4a/ Edtech in China saw a major crash 1/ COVID impact 2/ Global traction 3/ M&A spree 4/ China edtech crash 5/ COVID effect tapers 4b/ Edtech in China saw a major crash 1/ COVID impact 2/ Global traction What happened? In 2021, China imposed a ban on for-profit tutoring services focused on public school curriculum and entrance exams. These regulations have been catastrophic for Chinese edtech companies: The stock of New Oriental Education and Technology Group was down 86% YoY, and TAL Education Group saw over 93% of its value wiped out. 3/ M&A spree 4/ China edtech crash Which led to… Pool of global capital that would have been invested into the Chinese market, now needed a new deployment opportunity 5/ COVID effect tapers So what? Increased $$ infusion into Indian market from abroad Yet to fully play out. Some level of uneasiness - will the same thing happen in India when edtech giants become too big? However, chances of this are low given that we are an economy geared towards American style capitalism and smaller role of government. 5/ COVID effect wears off and Edtech moves back to hybrid 1/ COVID impact 2/ Global traction 3/ M&A spree 4/ China edtech crash 5/ COVID effect tapers Schools and colleges reopened in phases after COVID → hybrid learning sets in after 1+ years of online school and college. This brought down the time students spent online and the reliance of schools and colleges on online platforms for day to day teaching. As hybrid teaching kicks in and online fatigue sets in, the ‘hotness’ around edtech dies down and the funding boom reduces. This spells trouble for a lot of companies that raised at rich valuations earlier especially if they were not monetizing or not focusing on outcomes. In a nutshell 2020 COVID-19 pushes India into lockdown & fear Sudden crisis in country → engagement in online teaching increases, strong B2B models emerge 2021 2022 Fatigue in online education Summer of edtech in India + China edtech crash Massive funding boom for edtech startups Early signs of market slowdown Funding begins to reduce M&A boom in edtech Kids staying at home, parents working at home → need ways to engage children → online extra-curricular classes become popular Larger edtech startups become even bigger “giants” Consolidation in edtech Choke points at Series A / Series B stages for edtech startups Number of edtech startups increase, especially for K12 where student free time is highest Saturation becomes evident with higher CAC, lower retention rates What does this mean for edtech investors? 1 Frequent exits, lower MOIC The capital warchests built by EdTech unicorns allowed them to go after smaller players building across various sectors. This meant good beach exits for these founders, but disappointing returns for investors - thus leaving them tentative on expanding their presence in the EdTech sector. 2 High volume, low differentiation EdTech perhaps commands the highest share of startups across sectors. This means that the market has become extremely crowded, with it making finding companies with differentiated plays and a right to win, hard to identify. Note: This includes data from the last 5 years What does this mean for edtech startups? (1/2) We asked edtech founders what challenges they faced through the last two years… 1 High CAC, low RoAS 2 Tough talent market 3 Trust is hard to gain Edtech startups were the ‘hottest’ employers in 2020-21, with rich salaries and high growth allowing expedited learning. But the slowdown has made jobs more uncertain and ‘edtech fatigue’ made other spaces more attractive. Large capital raises and a pressure to show rapid growth pushed startups to spend aggressively on marketing to acquire users → pushing up CAC (we’ve seen it as high as 40% of revenue) across the market. The trickle down effect on younger startups forced them to also spend aggressively. In a market with rampant ad spend and competition at every corner, trust from customers became hard to gain. As schools and offline routes reopened, retention rates and LTV took a further hit. What does this mean for edtech startups? (2/2) 4 Offline coming back strongly With schools reopening, B2C edtech players with pure online channels are bearing the brunt of customer churn. The number of paid edtech users doubled from 2019 to 4.9M in 2020, but then dropped to 4.8M in 2021. While this might mean that hybrid model may be a long term winner, smaller players find it tough to go hybrid with limited cash. 5 Battle for time & mindspace Whether it’s solutions focusing on core curriculum, or supplemental learning, or hobby learning, or 21st century skills, they all vie for one crucial currency - a higher share of the customer’s screen time. With a crowded market, it becomes difficult to assert a clear right to win for this time-share. 6 Locked up cap tables EdTech has been one of the most focused upon sectors in the Indian startup ecosystem in the last decade. This has meant that everyone from early stage to growth stage investors to late stage investors, are deep into the ecosystem with their existing investments, making it relatively tougher for new edtech founders to gather backers for their journey. The Blume Edtech Matrix 2022 The last two years made us rethink our edtech matrix 1 Motivation > Biz Model 2 Expanded user pallette 3 Catalysts of education Instead of revenue model (B2B Most market sizing reports in Businesses that are not directly vs B2C) we looked at what the the past have underestimated engaged in teaching (or not consumer’s motivation is: the edtech TAM for one simple directly engaged in imparting Acing an entrance exam? reason: a good product creates learning) but are servicing the Getting a job? Finding new its own market. overall education sector, have mentors? Because the goal of the consumer will determine how much and where they will pay, how they will discover the platform, and how they will behave. been seen as catalysts as This report covers spaces like 21st century skills, financing, communities and more - that were not covered in the 2020 report. opposed to “B2B models”, because their distribution, stickiness, and ARPU looks different than a learning platform. Examples include financing of education, admin tools for schools, etc. And we looked again at how edtech stacks up To break the edtech sector down into subparts, we classified businesses on three broad axes: 1. Age group served 2. Core job to be done Reach milestones! 3. Get into college! Get a job! Meet career goals! Paying customer persona Student Parent School Employer Blume’s Edtech Matrix: Here is how we visualize the current space Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring The COVID-19 impact also pushed the estimations of market size PreK: $0.9b $4b $6b K12 (test prep, co curriculars and extra curriculars): $2.7b College students & adults upskilling & learning: $1.6b How we saw the TAM in 2020 How we see it in 2022* K12 & college financing: $0.3b K12 and college B2B plays: $0.5b *These are only inclusive of customers in India. The effective TAM for startups selling globally is much larger, since it also includes the global TAM. And global traction proved that actual TAM is much larger Edtech startups in India have proved by getting engagement and subsequent revenue abroad that their TAM is limited ~$6b Global Market Size: ~$101b not just to $$ spent by Indian parents / students / institutions but also includes global spend. The global edtech market is expected to grow from ~$101b in 2022 to ~$300b in 2029. Building in the shadow of giants Edtech founders today are building in the shadow of giants Acquisitions by BYJU’s Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular 21st century skills Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring Edtech founders today are building in the shadow of giants Acquisitions by Unacademy Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Parent Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular Hobby Learning Supplemental Learning Extra-curricular 21st century skills Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Communities / Networks / Mentorship Admissions → Communication → Placements Hiring Admissions → Communication → Placements Financing Financing 29 And the expansion of giants made some spaces too crowded Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring But large opportunities still exist in other spaces Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring And we are seeing key themes emerge in these spaces Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Core Learning Curricular learning (“Getting good marks”) GAMIFICATION & WEB3 IN LEARNING Getting a job VERTICALIZED UPSKILLING Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) SHIFT FROM ‘EXTRACURRICULAR’ TO ‘LIFE AS A CV’ 21st century skills (Personality development / social development / Communities / Mentorship) EXPORT OF INDIAN EDTECH SERVICES Daycare, health, and safety EDUCATION EMERGING FROM COMMUNITIES P2P learning / Counselling / Teacher tools Admissions → Communication → Placements DIGITIZATION OF SCHOOLS Catalysts Admissions → Communication → Placements Financing Financing HELPING INDIAN STUDENTS MIGRATE Hiring There has been a spurt in the number of edtech unicorns Company Business Byju's is the most valued edtech startup of the world, valued at $21B. It started with providing pre-recorded teaching content for students in K12. Unacademy offers courses for test preparation and multi disciplinary learning. It enables educators to create courses and offers live courses to students. Eruditus provides online courses in executive education by partnering with global universities and their alumni. Upgrad is a 'Lifelong learning' company offering industry relevant courses and certificates for working professionals. Vedantu is a live online tutoring platform in the K12 space. Lead provides a school management software to assist in the digitisation and transformation of affordable private schools. Physics Wallah is a test-prep platform that provides online courses for students preparing for Class 12 board exams, NEET, IIT-JEE and other competitive exams. First generation of edtech unicorns are mostly in core learning Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship First generation of unicorns mostly fall in the core education space: Supplemental Learning Extra-curricular (music dance, etc) Get good marks → Get into college → Get a job 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring We’re also seeing several soonicorns emerge at > $500M Company Business Classplus is Shopify for offline tuition centers and allows centers to offer live classes and sell content on white label app. Teachmint provides SaaS solutions to individual tutors to manage virtual classrooms and online teaching. Brightchamps provides coding, robotics, and design classes and interactive learning to students in grades 1-12. Upskilling courses for college students and new graduates to get jobs in software engineering and data science. They will form the second generation of edtech unicorns Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (coding, vedic math, public speaking) Hobby Learning Second gen of unicorns will Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Financing be outside core learning / traditional B2C models. These soonicorns fall in 21st century skilling and catalysts plays. These companies all started out different enough from the giants Admissions → Communication → Hiring to not attract direct competition Placements (or acquisition offers) from them and had capital from their cap tables still available to them. Financing The 2021 boom also created a large set of edtech cos > $100M Company Business Doubtnut is a multilingual app that uses ML to answer doubts and questions of students within a few seconds. Once a student posts a picture of the question, the platform recommends a video of a tutor answering the question. It is valued at $154M and has over 2.5M DAUs. Cuemath provides after school maths classes for K12 students. The content is taught using an adaptive learning platform, visual simulations and guidance of a teacher. It is valued at over $400M and has a user base of 200k+ students across 20+ countries. Leverage edu is an enrollment management platform for colleges. Through this platform, universities can connect with students, provide relevant information and offer admission. Students can use the platform to prepare for entrance exams, find and connect with universities and apply for education loans. It has over 400 university partners and has helped place 10K+ students. It is currently valued at $120M Toppr is an after school e-learning and test preparation platform for school students focus on on school curriculum and entrance examinations. It was acquired by Byju's in 2021. Infinity Learn, launched by Sri Chaitanya, a leading educational group is an online platform offering exam preparation solutions to school students. The products include online classes, self learning modules, mock tests and a doubt clearing app. It is currently valued at $312M, with 1M+ users and 100K paid users. The 2021 boom also created a large set of edtech cos > $100M Company Business Collegedekho is an online college discovery platform. Its objective is to facilitate student recruitment for colleges and universities across degrees and streams. The website has a listing of over 35k colleges and has counselled over 2M students. Its current valuation is $120M. Quizizz is a gamified learning platform that uses quizzes to teach students the school curriculum. Quizziz can be used at school, college or work to create quizzes and polls. It is valued at $300M with over 50M users across 150 countries. Newton school provides an income share agreement program. It offers a 5 month long full stack development course. The course offers live classes and projects, access to a doubt solving platform, mentorship and interview preparation. It is currently valued at $133M PlanetSpark provides live online classes to K8 learners on English Communication, Public Speaking, Grammar, Creative Writing, Debating, Vlogging and other 'new age' skills. With its current valuation at $135M, it has over 2k tutors and has trained over 22k students. Varsity tutors is an online platform for test preparation and school curriculum. The focus is on K12 curriculum and test preparation tutoring for SAT, LSAT, MCAT, GRE. Its current valuation is $107M. Deep-dives into key opportunity areas We went deeper into each of these opportunity areas And looked at… Market size of space? Stakeholders and customer personas? What drives purchase decisions & usage? Interesting companies we’ve met? 1/ PreK under age 8 x Learning & personal development Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring 1/ PreK under age 8 x Learning & personal development PreK Age: Key Stakeholder: Age: 0-8 Parent Foundational Learning Personality Development Online learning and development platforms for children under the age of 10 have taken off in a big way. We’re seeing several companies working on: - Foundational learning: Learning languages, numbers, shapes, etc. - Behavioral and personality development: Managing emotions, developing curiosity, etc. Core Learning GAMIFICATION & WEB3 IN LEARNING Reading, awareness, social skills: Developing reading habits, interacting with diverse peers, etc. The sector saw a boost from COVID as preschools and daycare centers EXPORT OF INDIAN EDTECH SERVICES Supplemental Learning remained shut. But the much larger boost came from demand from “millennial” parents who wanted their children to have a head start before beginning competitive exams and core academic learning. Blume’s market size estimate: ~$500m 1/ PreK under age 8 x Learning & personal development 🌏 Global exposure and learning is highly valued Customer Persona ‘Personal fit’ with teacher > teacher’s educational qualification 💰 Mother makes purchase decision, father makes payment → moms are the key persona to target What drives purchase decisions & usage? ➔ ➔ Stress: “What products / services are my Aspirations: “My child better than me - track, & grow % of users coming via referrals. ✓ Guilt: “I don’t spend enough time with my ✓ ✓ Curiosity: “This new thing I heard about sounds interesting, I should try it for my kid” Solving for aspiration: Enable parents to share these loops with the outside world seamlessly, tying into organic discovery. ✓ nearby location” ➔ Solving for fear: Build strong feedback loops to showcase child’s achievements to parents. Should tie into retention. Convenience: “I need to keep my child occupied while I am at work in a safe and Building trust: Customer reviews from parents (on Facebook, app store, testimonials) are key. Should tie back to higher referral rates. Fear: “My child might not be hitting milestones / may get left behind” ➔ Enabling discovery: Word of mouth and referral channels works best - not performance marketing. Build strong referral incentives, child and need to make up for that” ➔ ✓ friends or siblings giving their kids?” should get more than I did” ➔ What have we seen work well in this space? Solving for guilt: Allow for periodic involvement of parents in the learning process via group classes or projects. ✓ Sampling works well: Build trial versions which end users can enjoy and leaves them wanting for more. Track trial to paid %. 1/ PreK under age 8 x Learning & personal development Most interesting seed and pre-Series A stage companies we’ve met in this space Company Business Wonderhood provides after-school learning app and toys for kids aged 2-6 in Math, Language, and STEM. Kutuki provides early learning to preschoolers using games, stories, rhymes, worksheets, live classes. Big Fat Phoenix builds video games to help kids with socio-emotional learning and development. talentedHippo develops immersive learning games in the metaverse, for kids aged 6-12. Little Leap provides live online classes for personality and creative development of small kids. Braingym Jr provides a gamified platform for kids to do daily questions as brain exercises to build a learning habit in English, Math, GK. Jumbaya provides animated read-along story books for children to help them build a strong reading habit. Vobble provides highly engaging interactive audio content to kids to help reduce their screen time via their own handsfree and child-safe Vobble headphone device. 2/ PreK under age 8 x Daycare & preschool Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring 2/ PreK under age 8 x Daycare & preschool PreK Age: Key Stakeholder: As more parents begin to live in nuclear families, and as more women join Age: 0-8 the workforce, the demand for daycare and preschools will increase. This Parent space has remained complex in the COVID era as parents feared sending Daycare Preschools Health Safety their children to crowded pre-schools, more parents worked from home, and now as parents begin to go back to offline work again. We believe that a large opportunity lies in (1) hybrid models, (2) micro preschools, and (3) physical centers that offer learning avenues that help students get ahead of their peers. Catalysts DIGITIZATION OF SCHOOLS Blume’s market size estimate: ~$350m 2/ PreK under age 8 x Daycare & preschool Customer Personas Daycare: Both parents work, nuclear family. Corporates (B2B2C / B2B perk) are a good channel. 👥Discovery starts with parents asking around in their circle: friends, neighbors, coworkers. What drives purchase decisions & usage? ➔ Anxiety: “Need a place where my child will be What have we seen work well in this space? ✓ Corporate led GTM: Distribution led by employers; now safe, healthy and happy while I’m at work / my we’re also seeing employers funding / reimbursing child should be with good like-minded children.” daycare cost with partner centers. ➔ Guilt: “I don’t spend enough time with my child.” ➔ Fear: “My child might become developmentally Facebook, website testimonials) are key! Should tie back behind.” to higher referral rates. Track referral rates and incentivize Convenience: “Should be near my home or referrals. ➔ office.” ➔ ✓ ✓ Building trust: Customer reviews from parents (on Hybrid engagement: Build online + offline hybrid tools Trust: “My friend or sibling has also sent their with children using offline daycare centers when parents child here / I know and trust the person who runs are at work and using online activities when parents are it.” working from home to maximize engagement and LTV. 2/ PreK under age 8 x Daycare & preschool Most interesting seed and pre-Series A stage companies we’ve met in this space Company Business ProEves is a day care aggregator where parents get curated / high quality recommendations for Day Care facilities. Kreedo takes an innovative outlook for early education. From setting up a new preschool, to introducing an evolved curriculum in existing schools, Kreedo presents a comprehensive array of solutions for early childhood development. Sportyze is a chain of gyms for kids (18 months to 8 years) focused on developing the child physically (gymnastics and athletic development), so they can also develop mentally. 3/ K12 x 21st century skills Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring 3/ K12 x 21st century skills Age: Key Stakeholder: K-8 Grade 8-12 Age: 8-14 Age: 14-18 coding and public speaking and extracurricular products Parent & School Student, Parent, & School like music and dance. While the market for these spaces Co-curricular (coding, vedic math, public speaking) Edtech in 2021 saw the rise of co-curricular products like has begun to get saturated, the market for 21st century skills that help with holistic personality and social development is still nascent. This includes helping Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) students develop and join communities, immerse themselves in entrepreneurial skills, and learn real life skills like personal finance etc. We believe startups looking Supplemental Learning at this space and successful in acquiring customers in GAMIFICATION & WEB3 IN LEARNING EXPORT OF INDIAN EDTECH SERVICES SHIFT FROM ‘EXTRACURRICULAR’ TO ‘LIFE AS A CV’ both India and abroad will be highly bettable. Blume’s market size estimate: ~$450m 3/ K12 x 21st century skills 🌏 Global exposure and learning is highly valued in India 1A / 1 Customer Persona ‘Personal fit’ with teacher > teacher’s educational qualification at this stage 💰 (Typically) Mother makes purchase decision → moms are the persona to target What drives purchase decisions? ➔ ➔ Aspiration: “My child should get exposed What have we seen work well in this space? ✓ Enabling discovery: Performance Marketing and word of mouth to western ideas, other students, new work well for such plays. Build strong referral incentives and track experiences, reading, debate.” and grow % of users coming via referrals. FOMO: “What are other children doing ✓ Building trust: Customer reviews from parents (on Facebook, app that mine isn’t?” store, testimonials) are key. Should tie back to higher referral rates. ➔ Fear: “My child might get left behind.” Share curated teacher profiles with the parent. ➔ Curiosity: “This new thing I heard about ✓ sounds interesting, I should try it for my kid too.” ➔ Solving for aspiration: Share unique experiences and interactions the child goes through with the parent. ✓ Driving demand: Highly interactive, premium platforms have Discipline: “Does my child enjoy been growing fast. Offline models now picking up pace post attending these sessions?” COVID. 3/ K12 x 21st century skills Most interesting seed and pre-Series A stage companies we’ve met in this space Company Business Openhouse has physical learning centers for students (preschool to 8th grade) to play, engage, experiment, and learn curricular and non-curricular skills. Playto allows kids to build small robotics experiments at home to solve relatable real world challenges. Early Steps Academy provides group discussion sessions on real-world subjects (crypto, entrepreneurship, climate, etc.) to help the child develop holistically. STEMpedia offers AI and robotics kits for kids aged between 5-17. Spark Studio provides online classes for extra-curricular and 21st century skills. 4/ K12 & College x Financing Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring 4/ K12 & College x Financing Age: Key Stakeholder: K-8 Grade 8-12 College Age: 8-14 Age: 14-18 Age: 18-25 Parent & School Student, Parent, & School Student, College, & Recruiter Financing Catalysts DIGITIZATION OF SCHOOLS In India, education has traditionally been seen as the puzzle, the solving of which opens doors for economical and social well being. This has become even more important now with economic disparity visibly rising. On top of this, the aspirational nature of Indian lower and middle class families pushes the bread-earners to always stretch themselves when it comes to spending on the education of their kids. The rising costs of school and college education have made way for K12 and College education financing players to enable parents to give their children the quality of education “they themselves could not get”. Also, an increasing number of students who wish to go abroad to pursue their education, has made these financing players even more bettable. Financing HELPING INDIAN STUDENTS MIGRATE Market size estimate for school financing: ~$140m + Market size estimate for college financing: ~$170m 4/ K12 & College x Financing Customer Persona 💰 Buyer and decision maker is the parent → marketing / content should speak to them! 🔠 K12: Desire to send child to a better school than parents went to. Often a desire for English medium edu. 🌏 College: Faith in higher education for social / economic mobility OR desire for global education / migration. What drives purchase decisions & usage? ➔ Aspirations: “I want/ I want my kids to pursue What have we seen work well in this space? ✓ school/ higher education in the best of schools or to get quality education abroad.” ➔ ➔ distribution channels via school/ college partnerships. ✓ NBFC Partnerships: Tie ups with NBFCs upfront to build Competitiveness: “The competition in India is a good loan book size, which in turn enables becoming extreme and my child might be better off trying an NBFC in the future - allows for sustainable margins. for global colleges.” ➔ Partnership-led GTM: Well thought through & optimized ✓ Thoughtful org building: Building your organization Rising fees: “My family’s economic status doesn’t depending on the type of financing solution - knowledge allow me to adequately manage the rising fees.” capital heavy if investment products based for financing Attractive products: “The market allows me to fees, or sales heavy if loan disbursals for financing fees. access solutions like no-cost EMIs, SNBL investment products, and more!” ✓ Student / parent champions: Success stories from customers inspires greater confidence & trust in new customers 4/ K12 & College x Financing Most interesting seed and pre-Series A stage companies we’ve met in this space Company Business Edufund allows parents to plan for and invest in the future college education of their child, starting at any age. Scholfe provides interest free loans to parents with flexible repayment schedules to finance their child’s K12 school fees. 5/ New graduates and working adults x Upskilling Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring 5/ New graduates and working adults x Upskilling Age: Key Stakeholder: Core Learning College Employed Adults Age: 18-25 Age: 20-60 Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Getting a job As a continued result of increasing motivations, aspirations, and competition, we’re seeing upskilling become one the largest opportunity areas in edtech today - especially catering to white collar professionals looking at certifications, higher salaries, newer industries or better roles. This also works towards satisfying the demand which the market has for many of these certified workers. A significant portion of this is now happening by way of verticalized upskilling - that is, upskilling programs focused deeply on one sector or profession. VERTICALIZED UPSKILLING The market size of vertical upskilling as a whole is the size of each vertical combined - making it difficult to estimate the composite market size. That said, even single verticals like Finance & Accounts upskilling present a > $b opportunity. So, verticalized upskilling across all verticals potentially represents a massive market opportunity. 5/ New graduates and working adults x Upskilling 💰 End user is the buyer & decision maker → the most straightforward product & sales loop in edtech. Customer Persona In the long term, organizations could also pay more for hiring upskilled workers 🤔 People motivated by desire to get a better livelihood (job, promotion, higher salary, etc.) What drives purchase decisions & usage? ➔ Career mobility: I want to move to other job What have we seen work well in this space? ✓ verticals, for which I need specialized learning ➔ Competitiveness: My peers are moving up in their outcome is being driven) is the key metric. ✓ respective careers, I want to be better-equipped to do that ➔ ➔ Partnerships: Partnering with universities / employers drives both brand and placement rate. ✓ Lack of opportunities: My college education is not sufficient to help me get a job, I need more skills to Crucial metrics: Placement rate (or conversion to whichever Case studies: Use case studies / success stories as marketing collateral to show the outcomes. ✓ Productized courses: If courses can be productized enough get a good job so as to not need specialized instructors, it helps avoid supply Market signalling: I need to get certain side scalebreak. certifications for my job (eg: CFA, CA) or jobs that I ✓ Quantity driven models: Acquiring students at low CAC is want are easier to get if I have taken certain key - vertical upskilling has the benefit of higher intent and courses lower clutter, thus lowering CAC. 5/ New graduates and working adults x Upskilling Most interesting seed and pre-Series A stage companies we’ve met in this space Company Business Zell Education is a verticalized upskilling platform for finance and accounts professionals. Virohan is a verticalized edtech solution to educate people and make them job ready for allied healthcare professional jobs (nurses, technicians, etc.). Alippo provides micro upskilling courses to women in fields like cooking, makeup, home decor making and enables them to join a community of other learners and launch home businesses. Vocuni is a verticalized edtech play which specializes and focuses on teaching relevant skills for blue-collar workers in the field of green jobs. Oneistox is a design and architecture education aimed at university students and early career professionals. Lawsikho is a legal edtech company focusing on test prep, upskilling, higher ed, and enabling remote work training and support to get remote jobs for graduates in India. 6/ New graduates and working adults x Community & Mentorship Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) Core Learning Getting a job Test prep (“Getting into college”) Co-curricular (languages, coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Admissions → Communication → Placements Financing Financing Hiring 6/ New graduates and working adults x Community & Mentorship Age: Key Stakeholder: College Employed Adults Age: 18-25 Age: 20-60 Student, College, & Recruiter Learner & Employer Hobby Learning Communities / Networks / Mentorship Supplemental Learning SHIFT FROM ‘EXTRACURRICULAR’ TO ‘LIFE AS A CV’ We now are seeing an increasingly high % of college students and working professionals, who are moving beyond the opportunity confines of their “core education” and are looking for ways to upskill themselves. This supplemental learning comes from either upskilling courses or from engagement in communities/ networks or from mentorships. As a result, we are seeing an uptick in players who are providing alternatives to traditional education methods, community-based or cohort based courses, specific skill development courses, etc. The reception so far amongst students has been fantastic and there is a potential for large plays to be built in this market. Blume’s market size estimate: ~$400m 6/ New graduates and working adults x Community & Mentorship 💰 End user is the buyer & decision maker → it’s most straightforward product & sales loop in edtech. Customer Persona 🤔 Highly self motivated, curious, ambitious individuals with a desire to learn and grow. 🤝 Typically living in metro cities. Likely in good jobs / from good colleges / in professional networks. What drives purchase decisions & usage? ➔ ➔ ➔ 1st-2nd year students: ◆ Exposure: “I want to explore / learn / discover” ◆ Network: “I want to build a good foundational network” What have we seen work well in this space? ✓ Crucial metrics: Tracking Placement% in top 3 metrics to build a strong overall funnel. ✓ 3rd/ 4th year Learners/ parents/ working professionals: Case studies: Use case studies / success stories as marketing collateral to show the outcomes - ◆ “The placement rates of this program are very high” channels like LinkedIn / college job-boards / ◆ “EMIs / ISA options allow me to focus on learning” digital watering holes for students work best. ◆ “There is a potential salary upgrade via this program” ✓ Employers: Quality driven models: Building selective TOFU will enable higher placement rates - build entry ◆ Type of hiring: mass market vs high-quality hiring barriers (like non-negligible fees / selection test ◆ Conversion rates and retention rates etc). ◆ Time spent on hiring process ◆ Driving employer branding ✓ Quantity driven models: Acquiring students at low CAC is key → focus on unique GTM channels 6/ New graduates and working adults x Community & Mentorship Most interesting seed and pre-Series A stage companies we’ve met in this space Company Business Leap Club is an exclusive community and networking program for mid to senior level women professionals across sectors. Skip The Line provides cohort based courses and a curated community for young professionals to build and scale tech led side projects. Papertown enables social discovery of creators and communities specific to learning & career. It allows for a vertical social network around learning and career. Peerlist is a professional network that allows users to build and publish work profiles, connect with peers and mentors, and refer peers for jobs. GrowthX provides cohort based programs in ‘Growth Leadership’ to help professionals learn how to grow digital businesses and build growth teams. But, we are also seeing several exciting companies emerge across the overall edtech landscape… And, here are some interesting companies we’ve met < $100M Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning Core Learning Getting a job Test prep . Co-curricular (coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety Catalysts P2P learning / Counselling / Teacher tools Admissions → Communication → Placements Financing Offline models Admissions → Communication → Placements Financing Hiring Finally, here are some exciting new themes we’re seeing globally … and look forward to seeing in India soon! Age: Key Stakeholder: PreK K-8 Grade 8-12 College Employed Adults Age: 0-8 Age: 8-14 Age: 14-18 Age: 18-25 Age: 20-60 Parent Parent & School Student, Parent, & School Student, College, & Recruiter Learner & Employer Curricular learning Upskilling Foundational Learning Personality Development Curricular learning (“Getting good marks”) INTERACTIVE CONTENT Core Learning Getting a job EARLY DETECTION & SUPPORT FOR SPECIAL NEEDS Test prep (“Getting into college”) Co-curricular (coding, vedic math, public speaking) Hobby Learning Communities / Networks / Mentorship Supplemental Learning PRODUCTIVITY & LIFE IMPROVEMENT CBCs Extra-curricular (music dance, etc) 21st century skills (Personality development / social development / Communities / Mentorship) Daycare, health, and safety P2P learning / Counselling / Teacher tools Admissions → Communication → Placements TEACHER DISCOVERY & TRAINING TOOLS Catalysts Admissions → Communication → Placements MICRO-DAYCARES, VIRTUAL SCHOOLS & HOME SCHOOLING Financing GRADING & COLLABORATION TOOLS Financing Hiring Thank you For questions or feedback please contact: Radhika Agarwal | radhika@blume.vc Amal Vats | amal@blume.vc Thanks to Karthik Reddy and Sajith Pai for sharing with us their learnings around edtech from a decade of investing in the space, and for their predictions around what we might see in edtech in 2023. And to Jhanvi Khosla for her help and efforts in drafting the report. And to all the inspiring edtech founders in our portfolio who further our strong conviction in Indian edtech.
