Edtech funding crisis sucks in two-decade-old firm and its thousands of students

iNurture, which partners with universities to offer specialised courses and skill-development programs, is facing a shortage of funds and has failed to pay salaries to its employees and faculty, according to employees and faculty members.

As a result, teachers have either quit or stopped teaching, leaving students who have enrolled for iNurture courses across universities stranded.

This comes amid a prolonged funding crisis in the edtech sector that’s afflicted giants such as Byju’s and Unacademy as well as Kota’s test-prep coaching industry.

“The delay in funding has affected our payments in the last few months. This has created some disruptions in a few universities," Ashwin Ajila, founder and chief executive of iNurture, said in response to Mint’s queries. “We do have a placement team, which needs to be increased once the funding is in place," he added.

Also read | The Kota factory war: How the cannibals came for the coaching giants

The 19-year-old company, which typically collaborates with tier-2 universities to address the problem of employability, has raised a total $63 million from Bertelsmann India Investments, Ascent Capital, and Vetureeast, among other investors. It last raised a $15 million Series C round in a combination of debt and equity from ADM Capital in 2022, when it was valued at about $60 million.

According to two people aware of the matter, iNurture has been in talks with UAE-based Kimera Investment, an existing investor, to raise ₹25 crore. It is also looking to dissolve its partnership with iNurture Galileo and secure ₹20 crore to pay salaries. iNurture Galileo is a joint venture between Galileo Global Education and iNurture Education Solutions.

“The Kimera investment has been delayed by some time but we are confident based on their commitments that we will close the deal by month-end," said Ajila. “As for iNurture Galileo, the agreements have been signed and we will receive the funds by next week."

On Mint’s query about delayed salaries, Ajila said the company plans to clear all dues by 15 August.

Kimera, Bertelsmann and Ascent Capital and some of iNurture’s partner universities that Mint reached out to on Friday did not respond to queries. 

Edtech in crisis

iNurture’s crisis is emblematic of the meltdown in the rest of the tech ecosystem. A prolonged funding winter has triggered a salary crunch that has extended to Kota, Rajasthan, India’s test-prep hub.

According to research platform Tracxn, funding in India’s edtech sector plummeted to about $712 million in 2023 from $2.9 billion in the year before.

Edtech giants including Unacademy and Byju’s, once India’s most valuable startup, have struggled despite their rapid growth during the pandemic. Both the companies have struggled with cash flow issues, leading to cost-cutting measures such as layoffs and scaling back operations. Byju’s was admitted to insolvency by the National Company Law Tribunal last week. 

Also read | Bankrupt Byju’s : Is the edtech crisis deepening?

“The overall investment sentiment has revived and is showing positive trends across sectors. However, edtech is in a slow lane mainly due to the nature of the business," said Anil Joshi, managing partner, Unicorn India Ventures, which has invested in ForeignAdmits and other edtech companies.

“The negative sentiments due to some of the high-value deals in the past have built negative perceptions about sustainability. But the (edtech) industry is evolving and new-age businesses are finding better use cases," he said. 

Students in the lurch

While iNurture has delayed salaries before, things took a turn for the worse late last year. By March, it stopped paying salaries altogether and ceased responding to emails, according to former employees. Salaries have been pending for 2-7 months, they said.

iNurture, as per the company’s website, had stitched partnerships with more than 30 university campuses across India, offering 50 programs on campus. About 15,000 students had enrolled in these programs, per investor reports. 

The company had partnered with Ajjenkya DY Patil University in Pune, SAGE University in Indore, ITM University in Raipur, and Techno India University in Kolkata. Some universities have now ended their tie-ups with iNurture, according to people aware of the developments, including the edtech company’s employees. 

Also read | Edtech firms bet on upskilling, higher education amid funding gloom

“It has been happening since last year. Many teachers left and we had periods with no faculty. Then they were hiring freshers who were not able to teach properly," said a student of one of the universities, requesting anonymity.

“In March this year, we were informed that the university has ended the partnership as it was not able to provide faculty," said this student, who has paid over ₹3 lakh for a three-year course in BCA. 

When iNurture partners with a university, it handles everything, including curriculum development, teacher recruitment, and student internships and placements. Students enrolled in the iNurture programme are restricted to iNurture-provided placements and cannot participate in the university’s campus placements.

According to multiple sources, including current and former executives, iNurture does not have a placement team anymore. 

The company has also received a tax default notice for about ₹66 crore. Ajila confirmed the company had received the notice, adding that it would be approaching the tax tribunal on the matter.

iNurture’s revenue increased marginally from ₹97 crore in 2020-21 to ₹102 crore in 2021-22, helping it narrow its losses from ₹13 crore to ₹12 crore, according to data sourced from Tofler. The company hasn’t filed financials for FY23 and FY24 yet.