New Edtech Kid On the Block: Study-abroad Startups Some of the startups in the space include Leverage Edu, Eduvanz, Leap and Unischolars
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Last month, hundreds of Indian students in Canada protested against authorities after an Indian student was asked to leave the country. This was after the Canadian Border Services Agency (CBSA) found his visa papers fake. It was found out later that 700 other Indian students have been part of the scam by a consultant in Jalandhar who sent them to Canada with fake letters.
While this may be a one-off case, where the repercussion was massive, many local agents in India's cities and towns have been luring students with promises of admission to prestigious universities outside the country for a very long time. However, as people become more and more aware of this organized sector, they are now abandoning them and opting for well-established study-abroad startups that make the entire process of taking admission and studying in a foreign country seamless for the students.
These study-abroad startups are assisting students in getting admissions followed by helping in Visa prep, selection of courses, loan and even accommodation on and near campuses, which is a must for any student looking for study abroad. Some of the startups in the space include Leverage Edu, Leap, ASL, among others.
While most business models within edtech, except upskilling startups, have lost sheen after offline educational institutions reopened last year, study-abroad startups have garnered investor interest. Recently, Leverage Edu raised $40 million in a Series C funding round led by the Princeton-based global education testing and assessment organization Educational Testing Service (ETS), the company which also led the $210 million funding in edtech unicorn upGrad.
"Since study abroad startups are helping students with their real needs, they are gaining traction as the market is quite fragmented and still a lot to do, the edtech startups are solving this problem at scale by leveraging tech," said Anil Joshi, managing partner, Unicorn India Ventures.
Primarily, we have seen two major drivers that are contributing to the rise of this segment Pandemic spillover and income mobility. As per the ministry data, the number of students choosing to study abroad showed a significant rise from 454,009 in 2017 to 517,998 in 2018 and 586,337 in 2019. However, due to the Covid-19 pandemic, the number fell by half, declining to 259,655 in 2020. This was primarily due to students choosing to defer their admissions to a later date. In 2022, this number was at an all-time high with about 7.5 lakh students signing up to study abroad.
"As the Indian middle-income group households continue to rise, we have seen a trend in upward income mobility over the last two decades with more disposable income becoming available for post-K-12 education. In India, we see an interesting trend of the majority of students going abroad for postgraduate education as that eases the path to integration into the workforce," said Nitya Agarwal, VP, investments, 3one4 Capital.
The success of study-abroad startups amidst the challenges faced by edtech business models in scaling post-pandemic can be attributed to seven key drivers, Somdutta Singh, founder and CEO, Assiduus Global, mentions below.
- Demand for international education experiences: The desire for global exposure and cross-cultural learning remains high among students and professionals. Study-abroad startups fulfill this demand by offering comprehensive programs that facilitate overseas education experiences, providing a unique value proposition compared to traditional online learning platforms.
- In-person experiential learning: Study-abroad programs emphasize hands-on learning and immersion in foreign cultures, enabling participants to develop crucial skills and gain a competitive edge in the global job market.
- Long-term value and network building: By fostering networks and relationships with international peers, universities, and industry professionals, study-abroad startups offer participants access to valuable resources and potential career opportunities, making their programs highly sought after.
- Unique market positioning: While other edtech models primarily focus on online courses and virtual learning platforms, study-abroad startups tap into the aspirational appeal of studying and living abroad. By catering to a specific subset of learners, they can tailor their offerings and create a more immersive and rewarding experience.
- Adaptability to changing circumstances: While the pandemic disrupted traditional study-abroad programs, study-abroad startups showcased their ability to adapt and respond to changing circumstances. They quickly implemented safety protocols, introduced hybrid models that combined in-person and virtual components, and offered flexible cancellation and refund policies.
- Technological advancements: They leverage virtual reality (VR) and augmented reality (AR) to simulate overseas experiences, providing a taste of what participants can expect. Additionally, advanced online platforms facilitate seamless communication, pre-departure preparations, and ongoing support, ensuring a smooth experience for participants.
- Collaboration with educational institutions: Study-abroad startups often partner with universities and educational institutions worldwide. These partnerships enhance their credibility, broaden their program offerings, and facilitate access to a wider pool of potential participants.
Within edtech, the study-abroad segment has become very lucrative for investors. "This is because a multitude of opportunities exist when it comes to solving for pain points of students looking to study abroad. From discovering the right courses to solving for the financial well-being of these students, these startups are solving problems that have the potential to unlock massive revenue pools," said Agarwal.
To put it simply, investors are showing keen interest in the study-abroad startup space as they see the potential for growth and success. "The entire study abroad admission process is quite lengthy and tedious, which needs lots of hand holding making students to have a successful selection. The experts or agents have limitations as the process is more or less manual. The edtechs in this space bring speed and scale with a lot of choices hence gaining traction from the investors' end too. Also, the per-student realisation is reasonably high which helps faster cost recovery compared to other options in edtech," said Joshi.
However, while technology helps in scaling, reaching out to potential students is a costly affair as they are spread across the country. "Startups in the study abroad space need reasonable establishment costs and continuous support on funding till they become self-reliant. Also, the business is seasonal. So, they need high capital support before they become self-reliant," he added.
Today, students are also bombarded with many options to select from - both with respect to the provider they can work with and end universities that one can apply to. So competing with unorganized agents, foreign universities who are taking care of it end-to-end and many startups that are entering the space can be challenging. "Increasingly, more and more students are traveling from beyond Tier I in India and are reliant on online platforms to embark on their journey of higher education. As more of these students come online, there has been an increase in instances of fraudulent practices that's been acting as a deterrent in conversion for these startups," said Agarwal.
To sum up, experts feel that there is a lot of potential in this space if the pain points such as ensuring program quality and safety, cost and affordability, cultural and logistical challenges, and competition from local players are resolved.