India’s edtech sector, which flourished during the pandemic, is now grappling with a significant downturn. According to exclusive data from Traxcn shared with Business Standard, 2,148 edtech startups have shut down their operations over the past five years, highlighting the struggles of the once-booming industry.
Rise and Fall of Edtech
During the pandemic-induced lockdown, edtech platforms witnessed an unprecedented surge in demand. With schools closed, students and professionals turned to online platforms for learning and upskilling, propelling the sector to new heights. However, as the pandemic ended and physical classrooms reopened, the sector began facing challenges. A funding slowdown, changing market dynamics, and operational issues led to a sharp decline in fortunes for many startups.
Funding Slows Down
Data from equity funding rounds reveals that edtech startups raised only $0.24 billion in 2023, a significant drop from the $3.6 billion raised in 2021. Interestingly, 2021 also saw the highest number of edtech companies shutting down, with 933 startups falling into the deadpool.
According to Ravi Kaklasaria, CEO and co-founder of edForce, an upskilling accelerator, adaptability and innovation are now the keys to success in the edtech space. He said, “The edtech sector has witnessed a wave of shutdowns as startups relying on classroom training and generic materials struggled to adapt to evolving demands.”
Peak and Decline
The Tracxn Feed Geo Report: EdTech India 2024 highlights 2021 as the peak year for the sector, where $4.1 billion was raised across 357 funding rounds. The third quarter of that year was especially noteworthy, attracting $2.48 billion in investments. However, the sector saw a dramatic decline soon after, as physical schools reopened, and investor confidence waned.
Startups Shut Down
Some of the more notable shutdowns include Stoa School, an alternative business education platform backed by Zerodha founder Nithin Kamath, and Bluelearn, a platform focused on upskilling and job search, which was backed by Elevation Capital. Both ceased operations in 2024. Other companies such as QuizMind, Vedu Academy, and Tribac Blue also shut down.
Even major players in the sector have faced challenges. Byju’s, once valued at $22 billion, has faced multiple rounds of layoffs, restructuring efforts, legal troubles, and debt issues. Similarly, Unacademy and upGrad, both significant edtech players, had to streamline their operations and lay off several employees as part of their restructuring.
Experts Predict Consolidation
Looking ahead, industry experts predict a phase of consolidation in the edtech sector. As smaller startups struggle to survive, larger companies with substantial resources will likely dominate the market. Lloyd Mathias, an angel investor, mentioned, “The edtech industry will move towards consolidation where large companies with deep pockets will establish/strengthen their online arms offering quality education while adding real-world value.”
The edtech sector in India is undergoing a major transformation. As it continues to recover from the pandemic boom, only companies that innovate and adapt to the changing landscape will thrive. While funding has slowed and many startups have closed, the industry’s potential for growth remains intact, with consolidation expected to bring more stability in the long run.
