As BYJU'S, Unacademy, and others feel the heat, the Indian Edtech bubble bursts.
When I started covering startups in 2019, the joke in the newsroom was that Indian edtech startups are nothing but online coaching classes and that edtech innovation was a misnomer in India.
Of course, when the pandemic swept the globe and India a year later, edtech was the only way to keep schools, coaching classes, and after-school activities open — innovation or not.
Even conservative edtech companies in India predicted the end of the classroom as we know it, such was the enthusiasm. Even edtech behemoths are stuttering now that schools are reopening, with business and revenue concerns, and a downturn to contend with.
The Edtech Boom Is Coming To An End
Since early 2020, phrases like inflexion point and boom have become part of the Indian edtech vernacular, while layoffs, reductions, and restructuring have become the new buzzwords in the business. While the pandemic was unquestionably beneficial to the industry, it has suddenly come crashing down like a tonne of bricks.
We don't say this lightly; two of the edtech sector's most stalwarts, BYJU'S and Unacademy, are going through a hard patch. In the case of BYJU'S, it is both the most valuable firm in India and the most valuable edtech startup in the world.
The Indian Edtech Giants Are Having a Hard Time
BYJU'S has raised approximately $6.3 billion in capital to date, with some of the world's greatest private investors and sovereign wealth organizations participating. The VC industry is heavily invested in BYJU'S, and any drop in its value will send a strong message about not only edtech but also Indian businesses.According to The Ken, BYJU's auditor Deloitte has failed to sign off on the unicorn's 2021 financials, citing concerns with financing, accounting, and revenue recognition as the reason. Any dilution or damage to BYJU's reputation is likely to spread to other edtech companies
The paucity of financials has made it difficult to assess BYJU's overall health, but we do know that BYJU'S-owned WhiteHat Jr reported a total loss of INR 1,690 Cr in FY21, and that 1,000 of its employees resigned this year after being instructed to work from home.
Unacademy is the company most likely to benefit from a BYJU'S blunder. However, it has shuttered its K-12 division in order to focus solely on test preparation and is expanding offline, where it confronts stiff competition.
Furthermore, the edtech unicorn is mired in its own quagmire, having laid off over 1,100 staff and reorganizing elements of its business. As we previously reported, the Gaurav Munjal-led business fired off another 150 staff in the last week.
Vedantu, too, is experiencing layoffs and has had to restructure sections of its business, as well as lower the prices of its K-12 courses from INR 25,000 to INR 5000 per year in order to attract more students. YellowClass and FrontRow have both laid off people, while UDAYY has had to close its doors — so is this just a churn in the edtech industry, or is this the beginning of the end for many of these behemoths?