Tracxn, a leading global SaaS-based market intelligence platform, has released its EdTech India – Feed Geo Report. Based on Tracxn’s comprehensive database, the report provides insights into the Indian EdTech space. The Indian startup ecosystem is one of the top three funded geographies in 2023 YTD in the EdTech space, next to the US. Despite this, funding for this space has been declining, as it has for its global competitors.
The global EdTech market has been facing challenges attributed to decreasing demand for online education, ongoing funding constraints, rising interest rates aimed at controlling inflation, and economic uncertainties. Nevertheless, the Indian EdTech sector shows promise due to a demand-supply gap between teachers and course availability in offline education. This might fuel the sector’s growth in the coming years.
Most of the funding into Indian EdTech startups in 2023 was secured in the second quarter. This space observed funding worth $713 million in Q2 2023, accounting for 73.43% of the total funding raised this year. This is also an increase of 37% compared with the corresponding quarter last year.
Total funding into the Indian EdTech space plunged 48% to $971 million in 2023 YTD (January 1, 2023 to August 7, 2023) from $1.87 billion in the same period in 2022. It declined by 50% against the same period in 2021, while the number of funding rounds in 2023 YTD experienced a drop of 77% and 82% compared with the same period in 2022 and 2021, respectively.
Late-stage investments worth $879 million have been recorded in 2023 so far, contributing to more than 90% of the total funding, which is also a drop of 23% compared with $1.14 billion raised in the same period in 2022 and a decline of 39% from $1.44 billion raised in the same period in 2021. Early-stage investments worth $75.7 million were recorded in 2023 YTD, an 88% drop from $618 million raised in the same period last year and an 82% drop compared with $414 million raised in the same period in 2021.
EdTech startups raised $15.7 million through seed-stage rounds in 2023 YTD, a drop of 85% from $105 million raised in the same period in 2022 and an 83% drop from the same period in 2021. K-12 EdTech, Test Preparation Tech and Higher Education Tech were the top-performing segments in the EdTech sector based on funding in 2023 YTD. K-12 EdTech startups have raised $711 million in 2023 YTD, a fall of 45% and 56% compared with the same period in 2022 and 2021, respectively.
All new Unicorns have yet to emerge in this sector this year, as against two new Unicorns in the same period last year. 2023 YTD witnessed seven acquisitions, a 70% decline compared with 23 acquisitions in the same period in 2022 and 19 acquisitions in the same period in 2021.
Among Indian cities, Bengaluru takes the lead in total funds raised to date, followed by Mumbai and Gurgaon. EdTech startups in Bangalore have raised over $8 billion as of August 7, 2023, followed by Mumbai ($2.5 billion) and Gurgaon ($497 million).
In the last two years, We Founder Circle, Peak XV Partners and MMPL Trust were the most active investors in this space. We Founder Circle, IPV, and LetsVenture were the top seed investors, while Peak XV Partners, Better Capital, and AngelList were the top early-stage investors. The top late-stage investors were MMPL Trust, WestBridge Capital, and The Chan Zuckerberg Initiative.
Furthermore, the EdTech space has contributed significantly to positive change in the country by making education more accessible and bridging the gender gap. With government assistance, advancements in technology such as AI, and growing internet access in Tier-2 and Tier-3 cities, the sector has the potential for significant growth in the near future. The Indian EdTech sector has also been instrumental in addressing gender disparities in education by providing convenient access to quality education at home. It has leveraged rising internet and mobile device penetration in rural areas to overcome cost barriers and make education more inclusive.
Moreover, the growth of EdTech in India has helped future-proof the country against events like school closures, ensuring continued access to remote learning opportunities for children and young adults. Despite the current challenges, there are reasons to remain optimistic about the EdTech sector’s role in transforming education in the country. With the right support and a continued commitment to innovation, it has the potential to drive meaningful change in India’s educational landscape.
Tracxn Technologies Ltd. is a data intelligence platform for private market research that tracks 2 million entities globally via 1800+ feeds categorised across industries, sub-sectors, geographies, and networks. It has established itself as a significant distributor of private company data, ranking among the top five players internationally regarding the number of firms and web domains profiled.