New Delhi: Varun Aggarwal, co-founder of Aspiring Minds, an education technology start-up, is hunting for companies that can help his firm scale up operation and provide more solutions in the education and jobs assessment space.
His company has acquired two firms in the past 18 months—one that helps students find internships and another in the jobs and skills assessment space. “We are one of the few ed-tech players who are making a profit, and are on the lookout for firms that can help our business," said Aggarwal. Ed-tech, as it is called, is older than new flavours fin-tech and food-tech, but it has flattered, only to deceive.
Still, there seems to be a recent wave of consolidation in the business that could result in companies with the size and scale required to tap the obvious opportunity in the space in India.
In July, ed-tech start-up Byju’s (Think and Learn Pvt. Ltd) acquired Pearson Plc’s TutorVista and Edurite for an undisclosed amount, in a move aimed at expanding its global reach and offerings for students. Kota-based test prep firm Career Point said in June it would buy online test-prep firm Plancess EduSolutions.
Online competitive exam and tuition start-up toppr.com in 2016 acquired Manch, which customises school education content for students.
Such activity is good for the sector as a whole, Aggarwal said. “You will see a select number of players emerging as leaders as the sector has started getting consolidated… It’s a new trend and it will get amplified in the near future." Aspiring Minds helps students assess their job-readiness and firms find better candidates by using assessment tools.
Maheshwer Peri, founder of Careers 360, another education technology firm helping students take career decisions, agrees. “Some may have noticed the sector due to some big ticket investments and acquisitions, but consolidation has started in the sector and you will see the momentum picking up further."
Careers 360, for instance has already acquired two companies. “If somebody has developed a solution and we can buy that then why not," Peri added.
Consolidation was long-overdue in the space, says Bikash Sahoo, co-founder of Gurugram-based FDS Hive, another ed-tech firm on the lookout for acquisitions.
Many companies, he said, entered the space expecting quick returns, or, at the least, a rapid increase in valuations a la e-commerce. That hasn’t happened.
In other cases, Sahoo says, companies that entered the business on the strength of angel investments, found it difficult to raise further funds. Finally, he adds, the space needs companies that have a vision for 7-10 years and a wide range of solutions. You can’t have a two-year build, operate, sell, model, Sahoo says.
Investors poured in $517 million across 231 deals in ed-tech sector since 2014, according to Tracxn Technologies, a start-ups tracker. The ed-tech space raised funds worth $101.7 million in 2014, $126.4 million in 2015, $186.1 million in 2016 and $103.4 million so far in 2017, Tracxn data showed.
Yuvraj Malik contributed to the story.