Ed-Tech has the stage and the spotlight. What next?
Yes, ‘Right Place Right Time' matters.
Ed-Tech companies find themselves in middle of the lockdown, like wallet companies found themselves in the middle of demonetization. They have the stage, they have the spotlight and now they have to make an impact when the sun is shining brightly for them.
The law of averages says that only a few of them might make the most of it, but there’s a larger picture to it. Like the wallet adoption did — it will expand the Ed-Tech industry and there will be no looking back from here.
Edtech is one sector which has continued flourishing amid the Covid-19 pandemic. 14 Edtech startups have raised funding since March 2020 - a reflection of this fact. Out of the 14, 9 were seed funded — which shows the confidence of the VCs in the industry.(Source - Business insider).
Having spend 2+ years in a budding Ed-Tech company, I have been following this space closely. From a long period of time, many companies have built amazing products but have failed to reach an audience they have deserved.
India has been a promising market with an expected market size of USD 2 billion by 2021. Specifically in India, a lot of companies have tried to establish themselves in various sub domains of Ed-Tech —K-12, upskilling and test preparations. But the challenges have been plenty — From competition in the exam preparation space to insufficient digital infrastructure beyond Tier-1 to slow adoption to e learning — all have created hurdles. To tackle the challenge of slow adoption, 2020 might be the watershed year.
But it brings me to the next question.
Will all the Ed-Tech companies benefit from this?
I believe — this would not happen.
Not all kinds of Edtech startups will benefit in this wave. With the disposable income shrinking, people would want to spend on Ed-Tech platforms that have offerings which are deemed necessary and not on the ones which are still perceived as a luxury.
What do I mean by necessities?Necessary learning could be edtechs providing e-classrooms, online tuitions, exams, and preparation of entrance exams. These have replaced classrooms in the absence of physical access to the classrooms. You can’t stop school or college education, it’s a necessity.
Not so necessary learnings could be expensive up-skilling courses which cost from several thousands to few lakhs, or a hobby course where you spend to learn playing a guitar.
Like always, there will be a demographic who will remain price inelastic to this concept of decreasing disposable income. Herein lies the opportunity. Edtech companies whose nature of business makes them not fit for a necessity type of offering, can appeal to the price inelastic demographic. They can also find new ways to appeal to the price-elastic demographic — by changing the brand image and focussing on perceived benefits in the downturn. How they can add value when the end -user wants to revive the career amid the pandemic. It all comes down to being a necessity — if you are a necessity, then leverage on it and if you aren’t, then create an image of a being a necessity.
For instance, a Guitar course for a hobbyist could not be tempting when he is price conscious. But the business can appeal by making the user look at the course as something which can help him beat the low times cheerfully. By making the brand talk to the users like a friend who can add value. Easier said than done, for sure.
But the truth is what is in front of us. It can’t be all rosy if the economy isn’t doing well, right?
With looming layoffs and pay-cuts, and rising unemployment rates, same number of brands will be fighting for the share of a smaller consumer pocket.
Overall, Ed-Tech is set to flourish, that’s for sure. More people will adopt e-learning and realize that Ed-Tech comes with convenience, flexibility and in many cases with price affordability. That they can access a global mentor sitting at their home. That they are saving time and money of conveyance to classrooms and tracking their learning better.
But there is no guarantee that just by being an Ed-Tech firm will be enough in these times. It’s the time to be a necessity, not a luxury.