India’s new-age edtech companies, which grew rapidly during the first wave of the pandemic in 2020, are continuing to grow inorganically this year by quickly acquiring companies, fueled by an increase in remote learning and online education as a result of the ongoing pandemic scare and partial lockdowns.
Byju’s, an edtech unicorn, announced the acquisition of Aakash Educational Services Ltd. on April 5. The cash-and-stock transaction was completed for nearly $1 billion, making it one of the most expensive transactions in India’s burgeoning edtech space. Think and Learn Pvt. Ltd., which owns and operates Byju’s, did not stop there. The company then acquired Epic Creations Inc., Great Learning Education Pte Ltd, and GeoGebra GmBH in order to expand into global markets.
To expand and consolidate its domestic footprint, rival firm Unacademy acquired Sequoia-backed FJS Tech Pvt. Ltd in July, K12 Technoservices Pvt. Ltd in October, and Incassable Tech Pvt. Ltd in November. UpGrad, another edtech led by Ronnie Screwvala, acquired KnowledgeHut Inc. in July and Global Study Partners in November to expand its footprint into international markets.
According to a recent report by BLinC Invest, a venture capital firm, edtech companies, particularly the larger ones, which were already riding high on a strong base of 2020, further built on and grabbed the massive opportunity to explore untapped territories and penetrate deep into India’s growing edtech market, which is expected to be worth $3.5 billion by the end of 2022, by raising funds aggressively.
In 2021, India gained three new unicorns, or unlisted companies with valuations of at least $1 billion, in the edtech space, Eduditus, upGrad, and Vedantu, bringing the country’s total number of edtech unicorns to five. In 2021, these startups will have acquired 21 companies for a total of approximately $3 billion. According to data compiled by VCCEdge, VCCircle’s data and intelligence platform, the startups financed the acquisitions with the $1.75 billion they raised this year alone.
The strategy for fund-raising and acquisitions was straightforward. In the edtech space, the companies wanted to consolidate their positions and expand geographically, horizontally, and vertically. While the majority of the funds raised by these startups were used to acquire subscribers, hire new educators, and improve their technology platforms, the growth-hungry companies used a sizable portion of it for inorganic expansion.
In a recent interview, Mayank Kumar, co-founder and managing director of upGrad, stated that the company plans to acquire companies that are two to four times larger than its closest competitor. Screwvala, co-founder and chairman of upGrad, argued that consolidation in the edtech sector benefits everyone. “Overall, consolidation is beneficial because it accelerates segment maturation, reduces market fragmentation, and enables scale and high-quality offerings to consumers at very accessible price points,” he said.
Byju’s chief strategy officer, Anita Kishore, stated that the company is always looking for acquisitions and partnerships that will allow it to offer more subjects and grades to users while expanding into newer markets.
