India's newest ed-tech, unicorn startup is the opposite of BYJU'S!

LEAD School is India's latest ed-tech unicorn, but unlike BYJU'S it aims to rebuild the traditional education system & not disrupt it! Let's learn all about it!

28th April 2022
2 min read

In a nutshell

It all started in 2012 when Sumeet Mehta, an IIMA grad & Smita Deorah, a chartered accountant moved from their cozy life in Singapore to India.
Both Sumeet and Smita were very passionate about helping young children from low-income communities.

When they realized that the major problem plaguing these communities was the broken schooling system, they decided to fix it!

They first approached this by starting schools in rural India. But, they soon realized that it wasn't enough to create a large-scale impact.

So, the couple took a different approach.
They started working to improve the curriculum of schools already operating, rather than opening new schools.
This entire concept gave birth to LEAD, as we know it today, in 2017!

LEAD vs Byju's - how are they different?
1) LEAD operates on the idea that students already spend a sizeable amount of time in school & tuition.

2) Sumeet & Smita realized that we don't need another 10-12 companies fighting for these students' attention. Instead, improving the schooling curriculum should be a priority.

3) So, LEAD's core offering is a full-fledged solution for private schools.

Well, LEAD is currently working with 2000 schools & ~800K students.
Here are their numbers: 1) Revenue — INR 57.1Cr 3) Net Loss — INR 126.1Cr
So, essentially LEAD spends INR 3.27 to make a single rupee! While it has managed to become India's newest ed-tech unicorn!


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.

  1. 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.
  2. 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.
  3. 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):

  1. Revenue — INR 57.1 crores
  2. Operating Expense — INR 186.6 crores
  3. 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):

  1. Revenue — INR 2380 crores
  2. Loss — INR 250 crores

For Unacademy (2020-21):

  1. Revenue — INR 463 crores
  2. 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!

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Tag wise split:

    Stage 100

  • Idea Validation 25
  • 0-10 Users 25
  • Early stage 25
  • Growth 25

  • Topic 100

  • Sales 20
  • Product 20
  • MVP 20
  • Founders 20
  • Funding 20

  • Content Type 100

  • Startup Analysis 100

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Unacademy started out as a simple college hobby for a co-founder, Gaurav Munjal. In 5 years, it was built into the actual company with a free tier and a subscription model.

Being the 2nd largest ed-tech startup in India, Unacademy enjoys a lot of attention from VCs.

Its current valuation is $3.44B, after it raised a $440M funding round in 2021. Much like any other VC-funded startup with deep pockets, Unacademy naturally spends a huge amount on growing its user base.

Given the wild popularity of IPL in India and that most of their target audience tunes in to watch IPL, Unacademy spends a ton on IPL ads.

1) Overall, in 2022, Unacademy spent Rs 40 Cr on IPL ads in 2022.

2) Their target audience accounts for over 40% of IPL’s total 20 Cr viewership, which is 8 Cr target audience.

3) Unacademy's paying user conversion rate = paying users/net users = 350K/30M *100 = 1.1%.

4) Traditionally, the TV ad conversion rate is 0.7%. So, net net the paying users = 8 Cr x 0.7% x 1% = 5600 users.

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6) If we say that on average the course fee is around 10K. Unacademy still is burning ~60K per user acquired.

How Physics Wallah became the only profitable ed-tech unicorn startup?

Physics Wallah started as a simple YouTube channel back in 2014. But, the creator of Physics Wallah, Alakh Pandey, had a long experience in teaching students Physics. In fact, after he quit engineering college in his 3rd year he moved to work as a Physics teacher in an offline JEE coaching centre.

But, although Alakh was earning well, the scope for growth was very limited. So, Alakh in 2014 started the YouTube channel. For the first few years, the channel got no traction. And, things were slow, to say the least.

But, in 2017, Alakh decided to take this more seriously. He quit his day job and started teaching Physics to niche group for ICSE students. The strategy of targeting a niche group worked and they lifted Physics Wallah to 10k and then 50K subscribers in a couple of years.

That’s a far cry from their initial strategy of offering students a Rs 50 recharge to subscribe to the YouTube channel 😂
But, overall, there are 2 things that worked for Physics Wallah
1) Incredible storytelling
2) Adding value to the community

Physics Wallah's audience base is a meme loving group that's intensely supportive of Alakh Pandey. Any conflict and the group is ready to take on the enemy with digital pitchforks and knives.
Seeing this result, it's clear that Alakh's initial obsession with his students massively paid off.
We learn 2 things here:
1) Buildd your community or audience, before building your product.
2) The best marketing for your startup is done by your customers

In 2020, this community pushed Physics Wallah to create a proper app that literally crashed on the first day of its launch. It reached 300K download in just 7 days and now has more than 5M downloads in 2 years.

Today, the various courses generate INR 350Cr in revenue. This is almost comparable to Unacademy’s INR 380 C in FY21. But, thanks to its loyal community of students it doesn't have to spend Unacademy's INR 414 CR on marketing 😉

It's quite funny how both these startups started out as YouTube channels but eventually took very different routes! But, now with the infusion of $100M VC funding and a larger team, it's no more just Alakh and his students.

Will the charm of Physics Wallah continue to dazzle if Alakh is not the one teaching on the screen? Only time will tell!