Bleak Future For EdTech Companies As Kids Go Back To School

The EdTech industry which was booming during the Covid-19 pandemic as parents and students preferred online classes, is now battling for its very own survival. Some are laying off employees, opening offline centres, offering discounts and restructuring their businesses. Byju’s has laid off 500 employees and Vedanta 425. Unacademy has stopped offering complimentary snacks and meals across offices. The economic slowdown is also leading to funding problems. Byju’s which announced raising $ 800 million in March 2022, is yet to receive $ 250 million from two of its investors. Abu Dhabi’s Sovereign Wealth Fund and Qatar Investment Authority are willing to invest but at 40-50% discount. A PwC India report says that funding for EdTech companies has declined 50% in the second quarter of 2022. The funding is now phase-based which is target and revenue driven. The downhill run started once kids started going to school and parents not renewing EdTech services. This has prompted Byju’s, Unacademy, Vendantu, Physicswallah, Eruditus, Lead etc to open offline tuition centres to attract students. The problem was that the industry focused only on growth and not stability, says an industry expert. The EdTech companies have now realised that 360 degree attention is required. The sector needs to communicate clearly so as to ensure students are not misled. More transparency and clarity are required on courses and cost factors.