India’s edtech market expected to grow to $10 billion by 2025

In 2022, as restrictions eased and schools reopened, hybrid learning became the way of life and edtech companies sought to adjust to the new way of teaching. Funding too was 44 percent lower than the record levels of 2021. Talking about financials, unit economics have also fallen deeper into the red.

BYJU'S is the world's most valuable startup at $22 billion. A look at the last reported financials, which was FY21, the edtech giant has posted a loss of more than Rs 4,500 crore, almost 20 times the loss it reported in its last financial year.

Now remember BYJU'S is yet to post its FY22 financials. A company insider told CNBC-TV18 that its core business is close to breaking even. The edtech major is also in final talks to raise $250 million to $500 million in funding amid pressure to put a lid on rising costs turn, profitable and repay its $1.2 billion term loan.

Competitors to BYJU'S in the K–12 space, Unacademy and Vedantu, which turns unicorn in 2020 and 2021 respectively, also have seen losses mount. Softbank backed and Unacademy’s losses nearly doubled to Rs 2,848 crore in FY22 as the startup's ESOP costs rose 2.5x during the period. On a unit level, the company spent Rs 5.15 to earn a rupee of revenue.

Vedantu is yet to touch at the Rs 200-crore revenue mark, its losses widened to Rs 696 crore in FY22. The startups last reported valuation was $1 billion, which translates to almost 47x of its total income.

The only outlier in this space is Physics Wallah, the startup which entered the billion-dollar club in 2022 after raising its first-ever institutional round of $100 million, and has been profitable since its inception in 2020.

Physics Wallah reported an over 14x year-on-year jump in net profit to Rs 98 crores in FY22. For the fiscal year FY23 Physics Wallah is targeting Rs 1,200 crore in revenue.

Now, beyond K–12, on the higher education, upscaling and B2B side upGrad, Eruditus and LEAD schools which have combined raised over $2 billion in funding also saw their losses while up in FY22. Ronnie Screwvala-backed upGrad’s losses soared 3x and crossed the Rs 600 crore mark in FY22. Advertisement and promotion emerged as the largest cost center for the company.

Losses for Eruditus has also jumped 32.1 percent to Rs 349 crores during FY22.

When it comes to LEAD School, it witnessed a 3.1x jump in its net loss to Rs 397 crore as expenses rose on higher customer acquisition. Despite a rise in loss and FY22 the company claims to have a clear path to profitable growth and expects to close FY23 with a revenue 2x higher.

As profitability remains elusive for edtech unicorns they are now shifting their focus on capital efficiency and cost cutting. 19 edtech startups including five of the seven edtech unicorns have laid off more than 9,000 employees since 2022.

The fallout has also seen startups like Lido Learning, Crejo.Fun. Udayy, SuperLearn, shutting operations. That's where edtech industry stands at the moment, the hybrid model is the hot trend now.

If it doesn't prove to be the magic bullet that edtech startups expect they will have to rethink business models while keeping learners need and business sustainability at the center.