It's raining ed-tech startups in India!
Let me paint you a picture. India is home to 1.38 billion people. Among them, 250 million are students.
Majority of these 250 million students have parents that are obsessed with education. Not entirely unheard of for Asian parents. And, definitely, the obsession is all for good reasons.
Given this dynamic, India naturally makes for a sweet spot for ed-tech startups to take root.
In 2022, India is home to 6 ed-tech unicorns and the most valued ed-tech startup in the world, Bjyu's.
But today, we're going to talk about an ed-tech startup that, unlike BYJU'S, doesn't aim to disrupt the present education system but rather wants to rebuild it.
Here's all you need to know about LEAD School!
Firstly, how was LEAD born?
It all started in 2012 when Sumeet Mehta and Smita Deorah decided to move back to India.
Sumeet, an IIM Ahmedabad graduate along with Smita, a chartered accountant, worked at P&G in their early careers. They were both happily settled in Singapore with their cozy corporate lives.
But, both Sumeet & Smita were always passionate about helping young children from low-income communities in India.
When they realized that the major problem plaguing these communities was the broken curriculum in Indian schools, they decided to solve this problem themselves.
Initially, they started a school for rural children in Gujarat, which then turned into five schools.
But, Sumeet & Smita realised that expanding by adding one school at a time wasn't enough to create a large-scale impact.
So, the couple decided took a different approach. They started working to improve the curriculum of schools already operating, rather than opening new schools. In 2017, this entire concept gave birth to LEAD, as we know it today!
Okay, so what exactly is LEAD, and how is it different from BYJU'S or Unacademy?
Well, the main goal of LEAD is to re-buildd the schooling infrastructure.
- LEAD operates on the idea that students already spend a sizeable amount of their day at school. And, with the culture of students attending external tuitions, that time just increases.
- Sumeet & Smita realised that we don't need another 10-12 companies fighting for their attention span. Instead, we should work on improving the schooling curriculum so there is no need for a secondary or tertiary solution.
- So, LEAD's core offering is a full-fledged solution for K-12 private schools. Where it provides teaching aid that includes devices, textbooks, curriculum advisory, and support services.
This is very different from the direct-to-student approach of startups like BYJU'S, Unacademy & Vedantu. The basic premise of these startups is entirely based on the idea of replacing schools with online education.
Another distinction is the impact it has on teachers. LEAD is empowering thousands of teachers currently teaching in schools across India. While BYJU'S type startup's centrally consolidated knowledge that's accessible to a huge pool of students.
So, these startups will evidently have a very different impact on the education sector. Although, they equally emphasize the digitisation of education.
Got it! But, how is LEAD doing as a business?
Now that we understand how LEAD is different from its competitors, let's look at some numbers to see how it compares with others.
LEAD is currently working with 2000 schools & ~800,000 students.
Here are their numbers (2020-21):
- Revenue — INR 57.1 crores
- Operating Expense — INR 186.6 crores
- Net Loss — INR 126.1 crores
So, essentially LEAD spends INR 3.27 to make a single rupee!
Now, compare this with BYJU'S & Unacademy and you start to see a pattern.
For BYJU'S (2019-20):
- Revenue — INR 2380 crores
- Loss — INR 250 crores
For Unacademy (2020-21):
- Revenue — INR 463 crores
- Loss — INR 1537 crores
Basically, every ed-tech unicorn is a huge loss-making machine!
If these ed-tech unicorns are bleeding so much money, why are VCs still hot for them?
Well, these ed-tech startups may be aiming to solve some core problems in India's education system. But, as businesses, they are clearly failing, at least for now.
Their focus on hyper-growth & acquiring users aggressively increases their operating costs. Of course, that's why we see them reporting ever-increasing losses.
But then why are VCs still pouring money into these loss-making ed-tech startups?
Like always, it all comes down to the potential of the ed-tech market or the darling term in the investing world — TAM or Total Addressable Market.
After the COVID lockdowns, the resistance towards online education dropped suddenly in India. This set forth a quick adoption of a new way of learning provided by platforms like BYJU'S & Unacademy and now LEAD.
Given the effects of the pandemic, estimates suggest that the ed-tech market size will grow to $10 billion by 2025. And all of these ed-tech startups, old & new, want a piece of the pie.
Now, it will be interesting to see, if these startups end up solving the problems in India's education sector for good, AND become viable businesses.
Seems like an uphill task given the current numbers. But hope is what keeps these ed-tech startups alive!