What are the challenges for edtech investors in India?
One of the biggest problems is finding the right entrepreneurs that meet their investment philosophy and are at the right stage for funding. Through numerous conversations with investors who were curious about the Indian edtech market, a common concern was being able to identify and support the right entrepreneurs, given their limited travel to this region. And even after the investment, support for entrepreneurs require more hands-on attention that can’t come from Silicon Valley.
From our research, there are hundreds of investors for whom “education in India” is a portfolio they’d like to pursue over the next five years. We’ve personally spoken with at least 50 of them, with a good majority looking to make investments this year.
The most well-known education investment firm in India is Sandeep Aneja’s Kaizen , which focuses on later stage ventures to mitigate risk. The latest philanthropic fund is Ashish Dhawan’s Central Square Foundation, which solely focuses on nonprofit ventures. These two firms are just the tip of the iceberg when you think about the increase in VC investments and actual dollars going into education over the past decade.
The edtech ecosystem is just starting to develop. There have been a few social entrepreneurship pitchfests, and Pearson’s Affordable Learning Fund, in partnership with Village Capital, just kicked off the first education-focused incubator .
What is one of your current projects?
In April 2013, Atlanta-based Gray Ghost Ventures First Light Fund invested in Sudiksha to build a chain of affordable private preschools. They then decided to hire us to help scale that model to support another 50+ schools. Building, recruiting and creating processes for that type of growth is a daunting task, so Josh is in Hyderabad right now working with that team.
What do you feel are the main challenges to the effective adoption of education technologies in India?
India’s education technology ecosystem today is where the U.S. was about 15 years ago. We don’t have centralized systems for teachers and educators to connect, streamline systems and share best practices.
In terms of actual tech adoption, the challenges aren’t that different from any other region in the world. Currently, almost all the attention is focused on hardware sales–mainly Android tablets/phones–and there is very little software or programmatic support to ensure effective implementation. There is huge potential for products on the Android platform for teachers, parents, administrators to manage and improve learning outcomes.
Which edtech companies have caught your attention out there?
TutorVista is heralded as the darling of edtech in India. It was one of the first Indian edtech companies to expand services to U.S. and Europe, and in 2009 was acquired by Pearson for $127 million. This acquisition also included the subsidiary company, Edurite, a school management company that provides private schools with services to revamp infrastructure, technology, and teacher training.
On the flip side, all the buzz and growth potential don’t always lead to positive outcomes. The case in example is Educomp , which went public in 2006 but has spent the last 5 years in a downward spiral
. Despite the fact that the adoption numbers for its most touted edtech product, Smart Class, grew from 100 to 6,550 schools in 2012, net profit margins have fallen 61% in the last four years. The stock has fallen 91% over the last three years. This has created quite a few disgruntled schools, parents–and investors.
What we’re seeing today are smaller efforts targeted at parents-as-payers, such as after-school tutoring products, informal “educational” (often used more for marketing than actual learning) gaming apps and test prep for IIT entrance exams.
Lastly, where exactly do you see the brightest spots for innovation in edtech in India?
The areas that excite me most from an entrepreneurial perspective are the unregulated markets: preschools (a $2 billion market projected to grow at an annual rate of 40-45% ), supplemental tools for K-12 classrooms, tutoring, assessments and test prep.
Over the next few years, I think we will see services that empower students to play a more active role in their learning process. We will see more and more students in India gaining access, via mobile devices, to tools like Coursera and Khan Academy that are better tailored to the Indian culture and context.
It’s an insanely exciting time to be at the front line with such innovative entrepreneurs. I’m meeting entrepreneurs who are able to put adaptive learning tools in the hands of poor children at just $2/month. And companies such as FunToot can show a 20% improvement on learning outcomes at that cost. I don’t know anywhere else in the world you can achieve that kind of cost-benefit ratio in education for the poor.
This article originally appeared here .
