Indian edtech up 3% in 2024, driven by PhysicsWallah

According to data analysis conducted by Inc42, a startup media platform, edtech unicorn PhysicsWallah is leading the sector as it alone netted $210 million of the total funding in the first three quarters of 2024. 

Without the Noida-based edtech platform, the country’s edtech funding in the first nine months of 2024 sits around $68 million, facing a decline of nearly 75% year-on-year. 

Though funding in Q3 2024 was up 357% to $224 million from $49 million in Q3 2023, without PW, it stood at $14 million. 

The funding boom of 2021-2022 provided a significant boost to many sectors, but the Indian edtech industry emerged as the biggest winner when the pandemic hit.

This surge catapulted the sector to become India’s third most-funded industry in 2021, attracting $4.7 billion in investments—behind only e-commerce ($10.7 billion) and fintech ($8 billion). 

With the return of physical classrooms, the demand for online learning stagnated, exposing flaws in edtech business models and raising doubts about their long-term viability.

The impact was evident with funding for edtech startups plunging by 88% year-on-year, falling to $283 million in 2023.

“Edtech platforms grew a lot in 2020, with the online learning mode coming into the picture,” Aashay Mishra, co-founder of PrepInsta, told The PIE. 

“The idea was that by 2025, the Edtech market will be a $5 billion economy. A large amount of funding was incorporated during this period, which led to an unparalleled valuation of many companies.

“Schools and colleges opened again, coupled with a slowdown in the market, which turned out to be a double whammy for edtech platforms.” 

An outlier, PW, led by Alakh Pandey, secured $210 million in fresh financing despite the edtech sector dealing with its own set of challenges post-covid. 

PW, which began as a YouTube channel in 2016 by Pandey, grew to be India’s biggest online education community by 2020 and now caters to 46 million students in five vernacular languages. 

The idea was that by 2025, the edtech market will be a $5 billion economy
_{Aashay Mishra, PrepInsta}

With a a diverse student cohort consisting of third graders to those preparing for competitive engineering, medical, and government exams, PW has attracted thousands of students. 

The startup, which also runs approximately 180 physical centres, secured its latest round of funding from Hornbill Capital, a hedge fund formed through a partnership between China’s Orchid Asia and India’s Hornbill. 

Lightspeed Venture Partners and existing investors WestBridge and GSV also contributed significantly.

The Series B round now values Physics Wallah at $2.8 billion, a significant jump from its previous valuation of $1.1 billion in June 2022.

According to Anup Jain, founding partner, India Early Stage Fund, PW’s success, compared to its peers, stems from its hybrid approach. 

“The edtech industry has learned valuable lessons from its rapid rise and fall after the pandemic. While the initial boom showed potential, many companies struggled to scale effectively, highlighting the need for a hybrid approach,” he told Inc42. 

“PhysicsWallah is a standout example, managing to break through the clutter. The future of education is not just in online models, but in combining digital and offline experiences.” 

Reports suggest the Pandey-led startup is preparing for a public listing and is talking with investment bankers about an initial public offering. 

If successful, PW would become India’s first publicly listed edtech company. 

PW’s achievements in the past two years starkly contrast to some of the major players in India’s edtech space. 

Unacademy, headquartered in Bengaluru, has laid off around 2,000 employees since 2022. 

In July of this year, the company eliminated an additional 250 positions, citing the need to restructure to achieve profitability.

Byju’s, which was once India’s most valuable startup with a valuation of $22 billion, has experienced a severe decline over the past two years and is now facing the possibility of bankruptcy proceedings.

According to Bloomberg, the edtech giant, led by Byju Raveendran, has been accused of illegally transferring funds from its US affiliate, according to a recent lawsuit filed on in a federal court in Delaware.

Although the declining funding trend may indicate that investors are shifting their focus away from the edtech sector, the industry’s willingness to embrace reforms could lead to an attitude shift. 

“Firstly, the edtech sector needs to have a clear and sustainable business model to generate revenue and profit over the long term. This may require rethinking pricing strategies, product offerings, or other aspects of their business,” said Prashant Narang, co-founder, Agility Ventures. 

“Secondly, they need to be efficient and effective in their operations, minimising costs while delivering value to their customers. This may require streamlining processes, automating certain tasks, or outsourcing certain functions.”