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How and Why well-funded Edtech Startups failed in India?

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The Edtech sector in India has experienced rapid growth, with new startups being introduced frequently in recent years. This growth can be attributed to the increased usage of smartphones and the growing demand for online education. However, many Edtech startups are facing significant challenges, leading to the closure of numerous companies.

In 2022, several Edtech companies were compelled to make difficult choices. Lido, an Edtech company that provided live online tuition classes, had to close down in February 2022 due to a lack of funds. In April 2022, Unacademy laid off over 600 employees, followed by Vedantu, which laid off over 200 employees. Additionally, over 800 employees resigned from Byju’s Edtech startup within two months after being asked to work from the office. The Edtech industry also accounted for 40% of the layoffs in 2023. Byju’s is now involved in multiple bankruptcy cases in India and abroad.

Let’s delve into the factors that led to the downfall of these heavily financed Edtech startups.

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Fierce Competition.

The Edtech sector market has become saturated with nearly 4500 Edtech startups in India. Many of these startups offer similar products and services which led to fierce competition. This increase in competition led to price wars and an increase in customer acquisition costs. Many startups invested heavily in marketing and advertising to reach potential customers, which strained their finances as acquisition costs often outpaced revenue growth, leading to unsustainable business models.

Regulatory Challenges.

The regulatory environment in India can be complex and unpredictable, with strict guidelines governing accreditation and quality assurance. Edtech startups often struggle to navigate these regulations, especially those offering formal degrees and certifications. Changes in these regulations can disrupt ongoing operations and increase operational costs. Failure to comply with these regulations could lead to various legal issues, making it challenging for startups to establish themselves in this oversaturated market.

Ineffective Marketing Strategies.

Effective marketing strategies are essential for Edtech startups to create brand awareness and establish themselves in the market. Many unsuccessful Edtech startups fail to invest in targeted marketing and communicate their value proposition effectively. In the Edtech industry, marketing should concentrate on developing relationships, demonstrating value, and creating a supportive learning environment. Authenticity and credibility are more important than flashy advertisements.

Conclusion.

Edtech is not a company or an industry but a powerful evolving concept. Despite countless failures in this sector, the future of Edtech is still promising, provided companies learn from past mistakes and address these issues through innovation, quality focus, regulatory compliance, and a commitment to user engagement.

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Brush Up Your Skills With The Learning App Of Byju’s

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The start-up culture of India has developed in the last two decades. Previously, it was America who hyped about the start-up community while India was being orthodox. But, the time has brought before us some of the most successful start-ups rising from the Indian community. These days the young minds create the start-ups who want to bring a diverse change in our society. But, for transforming our society and eradicating all the delusional thoughts holding it back from developing education is the priority. And, speaking of education, we have already heard of Unacademy, Udemy, etc. They are trying to reach even the most rural students and enlighten them. The idea of a start-up for providing online education is truly a need especially for a developing country like India. Byju Raveendran founded Byju’s Learning App in 2011 to provide online education and online live classes. Currently, the headquarters of the company is based in Bangalore, India. With only five employees in the team, Byju serves students across the world.

About the Founder Byju Raveendran

Born in
the 1980s, Byju Raveendran belonged to a small village in Kerala. Both of his
parents were from teaching background but he was never pushed for excelling in
his academics. His father wanted him to be more interested in sports. He
completed his schooling from a local school and went to Government Engineering
College in Kannur, Kerala.

Raveendran
acquired his bachelor’s degree in Mechanical Engineering. He chose to study
engineering over medical because he won’t be able to make time for playing
sports as a medical student. After his graduation, he joined a company as a
Service Engineer. Raveendran cleared the CAT exam with 100 percentile but
declined to take admission for MBA.

This is
when his entrepreneurial journey started and he co-founded Byju.

The
Idea

After
making it to the finest IIM of India, Raveendran still decided to not go for an
MBA. This was the turning point of his career and he aced it. While his friends
took admission in the top IIMs, Raveendran decided to teach the MBA aspirants.
So, he started providing offline tutorials to the students. And, he used to
take classes on the terrace of his friend’s house.

Origin
of Byju’s Learning App

While
Raveendran started taking coaching classes, he initially didn’t charge any
money. But, the students were free to sign up for the paid advanced classes if
they liked the preliminary ones. The number of students grew eventually. And,
one fine day he found himself conducting mathematics workshop comprising of
20,000 students around major Indian cities.

From
Offline to Online

Since
the number of students grew exponentially, Raveendran decided to record his
lectures. By 2009, he started making video lectures for students across 45
different cities. Raveendran’s tutorial videos pushed him to open a company,
Think and Learn. He established it with a passion to create learning videos for
school students. The idea expanded to provide competitive support as well.

The Success of Byju’s 

After
Raveendran founded the company in 2011, he finally launched the Byju’s app in
2015. The launch of Byju’s app was very successful witnessing more than 2
million downloads in the first three months. Next year, Byju’s app became the
Best Self-Improvement app under Google Play India. In 2017, the company
released two more apps, Byju’s Math App for kids and Byju’s Parent Connect App
respectively. The later helped the parents to track their child’s progress. The
company received its initial funding from Aarin Capital back in 2013.

By the
end of 2018, the app had 15 million users and over 900,000 paid users. Byju’s
also acquired a couple of companies in its journey. It acquired TutorVista in
2017 and Osmo in 2019. Within 2018, the company raised around $250 million from
its global investors. Recently, it raised another round of $50 million from
Mark Zuckerberg, Sequoia Capital, Sofina, The Chan Zuckerberg Initiative, etc.
In 2018, Byju also took an entry into the unicorn club valued at $1 billion. This
year, Byju’s also received the EY Entrepreneur of the Year Award for start-ups.

Byju’s is the only start-up in Asia that is backed by Mark Zuckerberg. By the end of 2019, the company’s total funding summed up to $971 million and its total valuation to $8 billion. The app had more than 10 million downloads by 2019.