In today’s scenario, where the world of educational technology start-up is rapidly expanding and having great impact on the education market, it is igniting the hopes and dreams of entrepreneur and investors in the sector. Edtech start-ups are offering great opportunity for investors as more and more start-ups are coming up with their innovative concepts and ideas to help budding minds build a brighter future for them.
Rise India, one of the leading education and training groups in India, contributes to India's rise and growth by investing in variegated education groups and institutions. It is an investment firm that has been contributing in education industry by providing skill development across country.
The group offers large-scale courses and training programs catering employment and education. It has successfully provided training and placement to more than 50,000 students in various industries such as retail, IT, BSFI, Construction, Driving and Renewable Energy. The group is keen to invest in CBSE schools, Business schools, enterprise learning and education start-ups to form a collaborative platform to deliver global standardised education.
Entrepreneur interacted with Ajay Chhangani, CEO of Rise India Group, to know more about the investor’s interest in education start-ups, opportunities they look out for and the response from the market:
What kind of investor’s interest could be seen in education start-ups these days? What could be the reason behind the same? Do you think the trend will continue?
Education industry has been always a profitable sphere of business. In India, this industry has a high potential of growth owning to its vast population with adequate buying power. In the mean time, there is a good fervor among Indian populace for high-end professional education and standard elite institutions.
Hence, investment in education is becoming a point of interest for investors. India is among the youngest countries of the world from the prospective of population demographics. The country has about 130 million school-aged children.
However, investors are keen to invest in education startups that are making mark in the industry with unique and innovative education solutions. Conventional ideas are not the buying point. Investors only invest when there is a potential idea that can reinforce sustainability of the business and returns. The same is with education industry. The trend of investment in education sector will continue and there are possibilities for better business opportunities.
How exciting is the K-12 segment for investors? Are they seeing real innovative concept coming up in this space?
Investors are quite fervent about the K-12 segment. Digitization and emergence of Information and Communication Technology (ICT) is the recent trend in education industry. A number of innovative ideas are coming up in the sector, but their viability needs to be analyzed from both utility and market point of view. The extent to which they promote education and propel growth in the industry is the crux to attract investments.
The most important factors that impact K-12 innovations are consumer behavior and last mile connectivity. K-12 education segment in India needs innovation with effective as well as practical approach. The Indian education market has its own unique set of challenges such as lag in perforation of technology, complicated socio economic issues and geographical barriers.
How do these start-ups (like Flintobox, Wonderboxx, etc) differentiate themselves from traditional educational games? What USP or key areas investors look at before investing in such start-ups?
Start-ups such as Flintobox and Wonderboxx have integrated education, games and online retailing to a single platform. Their approach is innovative enough to combine the diversified verticals to shape up a sustainable business idea.
Additionally, in the current market, most of educational games are ICT based and these start-ups have successfully inverted the trend from digital games to games requiring physical involvement. Most importantly, for nuclear middle class families with working parents, engaging children in creative activities and keeping them away from TV becomes a challenge. Start-ups such as Flintobox and Wonderboxx have offered an effective way to deal with this common household issue.
As far as USPs or key areas are concerned, the selling point to attract investors is the solution and how they improve customer’s life. Therefore, the more a solution is education oriented more will be its business viability.
What factors do you think will fuel the growth of such startups in India – both in urban and rural areas?
For optimal growth of innovative education start-ups, a continued upgradation of products and solutions is necessary. Other paramount factors are enhanced customer experience, faster delivery of solutions, scaled and reduced cost of customer acquisitions.
In India, the penetration of IT services and amenities will have to be throughout its vast rural landscapes. Population demographic is contrasting in the nation due to huge geographical differences.
For better growth of K-12 based start-ups, the overall infrastructure of the country should be developed pervasively. From investor’s point of view, a clear road map to business and comprehensive understanding of promoters is crucial to draw any investment, which will in return fuel growth of the industry.
Generally, what kind of Return on Investment (RoI) do investors reap by investing in such projects and in how much time they can expect the RoI coming?
Generally, Investor’s concern is drawing multifold returns from any investment. However, many a times such expectation appears to be unrealistic. RoI in investment is linked to many market parameters. In the current economic scenario, about 30 per cent yearly returns can be expected for a period of 3 to 5 years after investment. In fact, a yearly return of 30 per cent may be considered as a decent RoI.
With government focus increasing on providing quality & affordable education to students, how do you see the future unfolding for such start-ups?
Education in India never received its rightful impetus from government throughout the past. Although, primary education in India is made compulsory through the constitution, it has not reached a massive segment of population, especially in rural landscapes.
Government spends less than 5 per cent of GDP in education even though skill development and vocational training have become a need of the hour. Lack of quality education has manifested concerns such as employability issues in the country.
With plethora of setbacks, the country is struggling on its way to development. In such a backdrop, prospects of Edtech start-ups are certainly not fervent. However, a gradual development in economic scenario as well as industry sphere of the country can be observed. The market is slowly turning to be favorable for business in any domain. If a constant progress can be sustained, the future will certainly bring better prospects for the industry.