Indian edtech space seems to be gearing towards a good year ahead, as at least three online education companies since December 2019 have managed to raise fresh funds from venture capital investors at a time when Paytm and Amazon India have also forayed into this space.
Mumbai-based Testbook, which helps students prepare online for competitive exams for government jobs, has raised USD 8.3 million in fresh funding by Indian venture fund Iron Pillar.
With the new round, the five-year-old edtech startup’s total funding has crossed USD 12 million. Its existing investors including Matrix Partners India, Better Capital, and Vikas Chaudhury, who serves as the president of Reliance Jio, also participated in the round.
Testbook, which claims its app crossed 10 million downloads in September 2019, said it would use the funds to expand its offerings to include state government job recruitment exams and bringing the total number of preparation tests to 400 in the next two years from 100 currently, local media Economic Times reported.
Testbook runs a freemium model where it provides free content to woo students, while mock tests and full access to tutorials are paid. The startup is also looking to set up offline learning centers in smaller cities for students.
According to the company, its annual recurring revenue run-rate was USD 4.1 million and it has so far helped 35,000 students get placed in government jobs who account for 7% of all the users.
Testbook is not the only edtech startup to raise money in the first week of 2020. Earlier this week, edtech startup Tech Shiksha said it raised USD 180, 406 (INR 1.3 crore) from about two dozen investors of the Mumbai Angels Network. The startup, with its product Witblox, offers gamified teaching for children in the age group between eight and 16 through plug-and-play hardware toolkits in the STEM fields (science, technology, engineering, and mathematics). Tech Shiksha plans to use funds to expand its reach.
In fact, the funding trend in edtech has been continuing since 2019. In December, another Mumbai-based edtech startup, Eduisfun, closed funding of USD 27.7 million (INR 200 crore) from a clutch of angel investors and high net-worth individuals, including Bollywood (Indian film industry) actor Amitabh Bachchan, as per local media reports.
The sector caught the attention of global as well as India VCs with the entry of SoftBank-Alibaba backed payment service company Paytm and American conglomerate Amazon in edtech space in July 2019. Paytm said it would expand in the education sector by offering coaching, scholarships, test preparation, admission forms, and financial support to students, among other things. Amazon, on the other hand, forayed into the edtech space by rolling out a preparation app called JEE Ready, which allows students to take all India mock entrance tests for Indian Institute of Technology (IIT), the apex engineering college in the country.
In December, Indian edtech unicorn Byju’s, which has raised over USD 900 million in 12 rounds from investors such as Sequoia, Naspers, and Tencent, claimed to have turned profitable, as it posted a net profit of USD 2.8 million on the revenue of USD 188.8 million for the financial year ended March 2019. Byju’s claims to have 2.8 million paid subscribers,
Hans Tung, managing partner at Singapore- and US-based venture capital firm, GGV Capital, in a recent interview with KrASIA, said he expects the education sector to grow in spite of economic slowdown, and that it is one of the top sectors which GGV would be keeping an eye on this year.
“We’re bullish on education. In India, each year, there are 2.6 million STEM (science, engineering technology, maths) graduates, while China has about 4.2 million. So the number of Indians that go through science, and engineering education in India is immense,” Tung said. “These students strive to get good jobs afterward. So the return on investment is very obvious and proven. We are definitely seeing Indian parents spending their money on helping the kids get the best education possible.”