Many of us know about the rapid boom in the EdTech market specifically in the K12 segment(Age: 5 to 17) in India for academic subjects. But recently, I have noticed there is traction among startups focussing on the non-academic market at least from VCs, for example, Kyt secured a $5M Series A round, FrontRow raised $3.2Mn seed funding, Unacademy invested in Mastree and existing startups like CampK12 introducing new categories focussing in this market. And we humans are engineered to always lookout for the “next” thing, similarly, as a human being, I am curious if this market is the next frontier for VC investments in EdTech.
Adopting EdTech in the non-academic learning market for the K-12 segment:
Why this is gaining traction in recent months?
How to use the EdTech model for this market and whether it’s feasible?
In this article, I will focus on covering the above two questions to understand the fundamentals of this market, consumer behavior, and opportunities
Categories in the non-academic market specifically in the K12 segment:-
Subjects not related to school or formal education like Chess, Dance, Art, Music, etc. comes under the non-academic market. Schools love to call these extra-curricular activities. For convenience, I will call each subject a category resonating with business terminology.
About the market:-
This is a highly fragmented market since parents send their kids either to private coaching centers or to school-organized classes in their towns/cities and it comes with a cost in addition to the academic fees. According to Praxis Global currently, vocational training is a $3Bn+ market in India. So, parents in the affordable category are willing to send their kids to learn different skills. And students with age<8 tend to opt for more than 1 category to explore and find interests.
Traction in recent months:-
We all know that EdTech has been the most benefitted sector due to Covid forcing students to go online. This has also proved to an extent that virtual learning has every potential to replace the tuition market and even some schools in the US are exploring a hybrid model in the long term for formal education. Similarly, Covid has forced the coaching centers to shut down, and since it is not essential it didn’t have a major impact on the lives of the students but coaches/tutors have to go online to keep their business up and running which proved the minimal feasibility of EdTech model in this market. But, can EdTech provide a similar experience as offline learning which initially kept this market from growing, unlike the academic market? - It’s an unsolved question, and we will get to know over time from the performance of the startups, but personally, I believe it depends upon the category, and based on this its imperative to divide the categories into 3 segments (similar experience, to an extent, impossible).
Feasibility of different categories
The below chart maps the top categories based on their demand and technical feasibility.
I believe the categories in the red box can provide a similar experience or to an extent, are ripe for disruption and have the potential to adopt the EdTech model. However these come with nuanced challenges and some are similar to the academic market like tutor availability & expertise, infrastructure but the specific challenges are the requirement of product comfort, for example, teaching chess in zoom/ordinary video application will not match the experience of offline learning and require customization pertaining to the chess environment.
Key challenges:-
Product Comfort - Requires product customization depending upon the category
Cost Economics - Willingness to pay, since this market is non-essential, unlike academics it requires both product satisfaction, progress in the curriculum, relatively higher incentives to attract a wider audience, and prudent cost optimization methods
Non-FOMO impact - Academics create a FOMO effect due to the competitive nature but it’s a challenge to create such effects as this market attracts users on an inspirational basis initially. So, it is imperative to focus on the curriculum and product that engages with users actively and helps in the progress of the users better than offline learning
Progress: Parents are anxious about their kids’ progress. This market specifically requires self-practice to progress and this problem is even faced in offline learning. So, the product must facilitate the users to practice and constant communication with parents to monitor their kids to practice/engage.
Advantages compared to offline learning:-
No-commuting: This is a common problem faced by parents, pick-up & drop to the coaching center is a burden. EdTech solves this
Flexibility in timing: Majority of the coaching centers and schools have some fixed time slots but EdTech models can provide these time choices
Choosing tutors: Parents face this dilemma of choosing tutors/coaching centers due to location, timing, fees, etc. but EdTech models could provide the choice of choosing a tutor
Individual attention: Parents demand individual attention/separate time-slot for their kid which is challenging for private coaching centers and nearly impossible in schools but EdTech models provide this flexibility - individual/small groups
Demand in International Markets:-
International Markets have different dynamics compared to an Indian market due to easy penetration and adoption. The below table evaluates the different markets on 4 key parameters.
*Technical feasibility is calculated based on infrastructural constraints, smartphone penetration, and adoption
Short-term winning markets are the US and Europe which brings revenue but India and SEA are the markets with huge numbers which are key focus areas for long-term brand creation and sustainability.
So, if startups are able to solve the pain points around product comfort, curriculum-based progress, and cost economics then this market could be the next Edtech interest area for VCs.
Sources:
http://cdn.ey.com/parthenon/pdf/perspectives/Parthenon-EY_SE-Asia_Paper_final_092016_singles.pdf
https://edtechreview.in/trends-insights/insights/2544-asia-edtech-companies-accelerators
https://www.praxisga.com/PraxisgaImages/ReportImg/pga-labs-ivca-report-the-great-un-lockdown-indian-edtech-Report-3.pdf
P.S: This is my first article and would love to hear your feedback and please subscribe to Startup Stuff by Shrenivass JK
Quite interesting!
Good research and work.