EdTech Thread

On @Blumeventures' EdTech Thesis & Market sizing report that @sajithpai & I put together

How we view the space, market size, opportunity areas & seed stage startups to watch

Report → http://bit.ly/blume-edtech 

How we devd the framework → https://www.linkedin.com/posts/radhikaagar_edtech-in-india-is-going-through-a-unique-activity-6679381263536783360-fDaD

2/ Why we put this together?

- Edtech is rapidly evolving & is more imp now than ever post COVID

- The sector impacts not just individuals but also overall economic outlook

- As @singh_sequoia & @gauravmunjal say 'edtech is for India is what eCommerce was for China/the West'

3/ Built on learnings from:

- @bkartred who led the 1st institutional round in @unacademy

- @BlumeVentures' experience of investing in edu over the last 10yrs

- Founders (both in portfolio & pipeline) we've met trying to crack new edu innovations

3/n

4/ Building the Blume framework:

Edtech can be sliced & diced in many ways (content, pricing, pedagogy, etc.). We picked 3 ways of categorizing the sector - Age, Distribution, & Regulation - because stacked together, they form an exhaustive framework to understand EdTech

4/n

5/ Age - Edtech at diff ages serves diff "jobs to be done" -

- Pre-school is for day care + brain dev
- K12 is for foundational academics + social dev
- College/University is for employable skills + network dev
- Upskilling is for competitive advantages + CV dev

5/n

6/ But even within age groups, jobs to be done/motivations evolve. K12 is for foundational learning in early yrs but competitive testing in later yrs. Upskilling can be to gain either financial OR social capital. These nuances affect how end consumers make purchase decisions

6/n

7/ Regulation = the govt's involvement in the biz

Schools/colleges are bound by govt rules, making them tough customers to sell to. In the West, several biz have been successful in selling to schools/colleges inc @turnitin @clever @classdojo

In this trend is still nascent

8/ So far, Edtech success stories in India have largely been in the informal sector. Formal sector cos are slowly gaining traction as schools become more able & willing to pay for & experiment with tech + COVID tailwinds forcing schools to move online + rise of the APS model

8/n

9/ Distribution - answers the Q "who is selling to whom & how?"

There have been successful Indian Edtech cos across common distribution models - B2B, B2C, marketplaces, & aggregators. The distribution model a co uses determines their CAC, ARPU, & growth trajectory

9/n

10/ Edtech is increasingly seeing 'Unbundling' - where schools & colleges (or tuition centers) outsource individual services to third parties. These services can be paid for by the school or by specific students. Examples inc @AlmaConnect @guviofficial @classplus_app etc.

10/n

11/ Combining regulation & distribution:

While all 4 distribution models are commonly seen in informal education, so far formal education has been limited to B2B & B2B2C models. The chart below discusses this in further detail.

11/n

12/ Stacking of all 3 categorizations gives us the Blume EdTech Matrix - an exhaustive view of Edtech w 18 separate subsectors. It covers everything from B2B+B2C admissions services like @leverageedu to preschool marketplaces like @ProEves to B2C job prep like @interview_bit
12/n

13/ We expect the total edtech market to be $4b ($600m in formal & $3.4b informal) by 2025 (currently $750m), out of an overall $135b education market.

The largest subsector is K12+testprep for college, at a $1.5b edtech market in '25; closely followed by continuous ed at ~$1b

14/ Based on market size, growth potential, founder activity & our exposure, we identified 3 immediate opportunities:
1) Unbundling of formal ed
2) Prep for college-to-jobs
3) Continuous learning

& 3 future opportunities:
1) Preschool
2) B2C for kids under 10
3) B2B in formal ed

15/ A public & ever-evolving copy of our thesis & market sizing is here: http://bit.ly/blume-edtech 

Over the next few weeks we will be writing on each of the opportunity areas we mentioned.

@sajithpai & I look fwd to hearing your thoughts/questions on @BlumeVentures' thesis!

Fin.