Will Ed-Tech Startup Be Destroyed After Pandemic Boom Fades?

After there is a downwards pandemic situation, the demand for online tuition has reduced, which is affecting the revenue of ed-tech companies in recent months.
Will Ed-Tech Startup Be Destroyed After Pandemic Boom Fades?
Ed-Tech Startup

Education is compulsory and necessary for shifting the world from multiple zones. Due to the pandemic of Covid-19, many reputed companies and organizations are laying off their employees as they are suffering from economic instability. In this difficult situation, many ed-tech companies find themselves in a profitable market as studies became online.

However, as seen in recent days the world is fighting this pandemic situation and came this far where now students are freely back at school and colleges for offline classes. Due to this, online education startups are facing a downfall in the demand for online learning.

As the pandemic is receding, the Indian business models of ed-tech startups have started to clear up. After there is a downwards pandemic situation, the demand for online tuition has reduced, which is affecting the revenue of ed-tech companies in recent months.

As a result of the epidemic, most of the country's $180 billion education industry went online. Companies gambled big on pandemic-related events and rode a surge in the online education sector during the previous two years.

Will Ed-Tech Startup Be Destroyed After Pandemic Boom Fades?
Unacademy Fires About 10% of Its Employees

Cutting off hundreds of people due to a financial shortage

Startup Lay Off

However, they are currently cutting off hundreds of people due to a financial shortage and greater client acquisition costs as a result of the epidemic.

While failing investor sentiment and delaying fundraising rounds have harmed startups in general, ed-tech firms have been particularly hard impacted.

According to Inc42's Indian Startup Layoff Tracker, 18 Indian businesses have laid off 9,000 employees so far this year.

Lido Learning and Udayy, for example, have both gone out of business.

According to Saumya Yadav, co-founder, and CEO of the two-and-a-half-year-old Udayy, the venture shut down because business was not increasing after the epidemic, not due to a lack of money.

She stated that once children returned to school, the firm encountered challenges in expanding its initial model of online, live learning.

The shutdown was influenced by all-time high client acquisition expenses, low retention rates during the pandemic, and screen fatigue.

Unacademy co-founder has advised staff to prioritize profitability

Unacademy

Gaurav Munjal, the co-founder of Unacademy, has advised staff to prioritize profitability at any costs. He stated that the company's new objective is to achieve profitability and produce free cash flow.

According to Nikhil Mahajan, Executive Director of Career Launcher, there was an unending stream of free, low-cost money that was channeled into ed-techs. None of these startups have figured out unit economics. Money may go instantly for some of the smaller ones, he adds, adding that it would take 4-8 quarters for any organization to transition from hypergrowth to a positive cash flow trajectory. Online education does not provide even 1% of the physical school experience.

The Indian education market is expected to grow to $313 billion by 2030. The ed-tech industry has a market value of around $2 billion. Given that India has the world's biggest population of people aged 5 to 24, with 580 million people, the opportunity is enormous. India has the most school-age children of any country, with over 250 million.

Because the industry is still large, firms are embracing the hybrid approach and innovating to expand their physical presence.

Vedantu is also said to be looking into hybrid possibilities. According to Ankur Pahwa, EY's India e-commerce and consumer internet leader, most ed-tech businesses are striving toward an omnichannel approach to improve learning outcomes and experiences, increase stickiness, and lower customer acquisition costs.

According to Nikhil Mahajan, Executive Director of Career Launcher, collecting $50 million was a piece of cake for firms with low revenues. For 24 months, ed-tech businesses were in a honeymoon period, and a boom cycle occurs every 5-7 years. He claims that when the tide shifts, just two out of every fifty people survive. Companies with cash-generating business concepts will succeed, whether they are online, offline, or hybrid. Markets and customers will determine how these models are combined.

So, it is clear that ed-tech firms are staying in the market with the help of deep pockets which are funding their hybrid move. Some of them had taken the necessary steps even before the epidemic began to fade. As in other competitive industries, the future belongs to those who can innovate while focusing on sustainability.

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