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Education

Key insights on education startups from EduStars 2013 report to be released soon: Part 1

Team YS15229 Stories
Key insights on education startups from EduStars 2013 report to be released soon: Part 1

Wednesday December 04, 2013 , 4 min Read

With the EduStars 2013 finale just around the corner (on December 6, 2013), we studied education startups in India. Extensive data was collected from EduStars applicants over 2012 and 2013 in an attempt to understand the current startup ecosystem in this space. We covered companies from across sectors, including K12, Test Preparation, Skills Development and Corporate Learning, looking to identify areas of focus, revenue models, traction and key challenges faced.

We will be presenting the key insights on education startups through a series of posts over the next few days. These findings will then be consolidated in the EduStars 2013 report, which will be released soon. This post will focus on the education startup ecosystem as a whole, while subsequent posts will deep-dive into the sub-sectors. Here are the key insights:

Skills Development is the primary area of focus for education startups

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2/3rd of education startups are focused on the skills development space, be it Vocational/ Behavioural Skills or Technical Skills. A majority of these startups are leveraging their platforms to offer both Vocational/ Behavioural Skills and Technical Skills. On the other hand, less than 20% of startups are focused solely on education technology (ERP, platforms etc.). Interestingly, almost half of them have some offering in this space, typically driven through by allowing third parties to build on their publishing platforms. This does raise some interesting questions - Is this a positive sign that companies are seeing the need for collaboration and are thereby extending usage of their platforms to others? Or is this a sign that companies are not able to generate enough proprietary content or get enough traction for their proprietary content?

Bangalore and NCR are the largest hubs for education startups

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In line with the overall startup landscape in India, it is not surprising that most education startups are headquartered in Bangalore. That said, unlike the overall trend for startups, an equal number of education startups are based out of NCR, with Mumbai fairly close. While startups in Bangalore are more skewed towards Skills Development and Education Technology, NCR has a large number of players in the K12 space.

Another interesting trend is the increasing number of startups from cities like Chandigarh, that are not traditionally known to have evolved startup ecosystems. Interestingly, December's EduStar of the Month was Focus Academy for Career Enhancement, which is based in Coimbatore.

Per-user licensing is the most preferred revenue model.

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Almost 60% of all startups have some form of user licensing as one of their revenue streams. Advertising is not a significant revenue channel for most startups. This could imply several things. It could suggest that startups are consciously trying to provide a distraction free interface by avoiding external advertising. It could also mean that most startups do not have enough traction to provide sustainable revenues from advertising.

 

Startups in K12 are seeing the maximum revenue

Contrary to expectations, it is not Corporate Learning and Skills Development that have startups reporting the highest revenue. A majority of companies that are expecting to cross INR 3 crore in revenue next year are serving the K12 segment. The dominant strategy for growing revenues is to acquire more users and try to convert them into paying subscribers.

 

Customer acquisition is the biggest challenge faced by startups

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Almost 50% of startups listed customer acquisition as their biggest challenge. This was followed by funding and hiring. In terms of customer acquisition, the most significant hurdle is skepticism about non-traditional education solutions and the lack of technological comfort of customers. Expectedly, branding and visibility are the areas where startups are looking for maximum support.

 

Other findings

• There was no clear sectoral preference from investors and we have a healthy mix of companies that reported Angel or VC funding.

• Only about one fifth of startups did not have solutions that are mobile-enabled.

• 2011 and 2012 seem to be years of the education startup boom, seeing the largest number of new startups emerging.

Book your ticket for the EduStars finale now. Reach out to us on [email protected] or +91 9900844990 for a discount code