Boom in Ed-Tech gets bigger: M&As, fundraises soar, way above 2-year total – The Indian Express

A pandemic-induced boom in the education-linked ed-tech sector has spurred a scramble for deals among the top players, amid record fund flows.

During the first nine months of 2021, the ed-tech sector saw mergers and acquisitions worth more than $3.35 billion, more than three times the consolidated amounts raised in the last two years — $416 million in 2020 and $783 million in 2019.

Similarly, PE-VC fundraises by ed-tech firms totalled $3.77 billion in the first nine months of 2021, far exceeding the cumulative $2.22 billion and $968 million raised in 2020 and 2019 respectively, data provided by Venture Intelligence showed.

Much of this funding activity is concentrated at the top, with larger companies like Byju’s cornering a major chunk of the M&A activity.

While in India, the fundraising amount for 2021 by the ed-tech sector is way above last year’s amount, the overall global scenario has been comparatively slower on this front.

According to CB Insights data, ed-tech companies across the world raised $8.27 billion till September 24 this year, and are expected to raise a total of $11.03 billion by the end of this year, compared with $12.63 billion raised last year. Most of this fundraising activity has come from early-stage start-ups, as seed, angel and Series A deals.

Almost half of the amount raised by ed-tech in 2021 so far, was cornered by Byju’s. The company has raised over $1.5 billion this year. In 2021 alone, Byju’s, which is valued at $18 billion, was involved in four out of the five biggest M&A deals in the ed-tech sector. This includes the January 2021 acquisition of Aakash Educational Services for $1 billion. In July, the company acquired Singapore-headquartered Great Learning for $600 million and US ed-tech start-up Epic for $500 million as part of its overseas expansion plans. Last month, it acquired California-headquartered code learning platform Tynker for $200 million.

“Like most other service driven businesses and commerce, education also found an opportunity in the digital space following the pandemic, and these fundraises are a reflection of that. While much of the ed-tech boom that we are witnessing in India is outside of the school, more akin to private tutoring, there is a real opportunity in these start-ups and companies getting involved with governments and education boards to formulate curriculum better suited for a digital world,” a Bengaluru-based partner at an early stage venture capital firm said.

Among the biggest fundraises in the ed-tech sector this year are Byju’s $1.39 billion investment picked from Blackstone, Silver Lake, Prosus Ventures, GSV Ventures and others in March, followed by a $650-million investment in Eruditus by Softbank, Accel USA and Canada Pension Plan Investment Board. This was followed by a $440-million investment raised by Unacademy from Softbank, Tiger Global, Temasek, General Atlantic and Mirae Asset Global Investments in August.

Industry experts have also pointed out the opportunity to look at the education sector as a for-profit sector that has spurred investment activity over the last few years.

“Schools and colleges are typically managed by trusts and there is no for-profit element involved even within private institutions. But with ed-tech start-ups like Byju’s, Unacademy or even a lot of smaller ones, PE and VC funds have a chance to make high returns on their investments,” a VC fund manager said.

The rapid growth of the ed-tech sector globally that had mainly come in the aftermath of the pandemic also saw a spanner in the works from China, the world’s biggest ed-tech market, when the Chinese government cracked down on the education and test prep industry earlier this year. This included a ban on for-profit private tutoring services that are based on the country’s core public school curriculum, and limits on the times for which students could attend classes. As a result of these regulations, entrepreneurs running ed-tech companies have been scrambling to overhaul their business models to adapt to the new policies before running out of their financial runways.


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