Despite the majority of businesses facing tough times due to the Covid-19 pandemic, edtech startups have witnessed extraordinary growth and emerged as a hot sector for venture capital firms to invest in.
Indian edtech startups have collectively raised over $795 million in the first half of 2020 as compared to $108 million in the previous year, said a Mint story quoting a Venture Intelligence report.
One of the major reasons for edtech firms recording a 7X spike in fundraising is greater use and adoption of online learning due to the restrictions on the opening of schools and educational institutions.
Other sectors like e-commerce, hospitality, mobility, and travel remained the worst affected recording 30-70% fall in the deal sizes. Indian startups have borne a huge brunt, as evidenced by its drop-in deals dipped by 31% to 272, as compared to 393 deals during the first half of 2019, the story said.
The total capital raised by the startups collectively has also reduced by 11% to $4.1 billion in 2020 till 26 June from $4.6 billion during the first half of 2019. Overall, edtech startups have contributed around 20% of the total venture capital investments in H1 2020, the Mint story added.
A TOI story too quoted the report which said that investors have started pulling back on early-stage bets as the deal of up to $2 billion was down by 43% to 98 and the transactions ranging from $2-25 million fell by 26%.
During the ongoing pandemic, a majority of the mega deals are being sealed by the poster boys of edtech. While Byju’s recently became the second-highest valued startup in India – after Paytm – by securing an undisclosed amount from global investment firm BOND Capital, Unacademy had raked in $110 million in February.
Tiger Global-backed Vedantu had also received around $44 million in three tranches during the period.
Apart from edtech firms, SaaS-based Postman had also raked in $150 million at $2 billion valuations last month. Meanwhile, food tech major Swiggy and Indian budget hotel chain Oyo received their pending funding rounds of 2019, including Bounce closing a $97.5 million financing round in January, i.e before the onset of Covid-19.
Given the current status of the spread of coronavirus in India and globally, the future seems a bit grim for VC investments. So far, India has reported 5.48 lakh positive cases with 16,481 deaths. The number of positive COVID-19 cases worldwide has crept to over 1.02 crores.
Many VCs and entrepreneurs have also cautioned that the next 6 months will be very critical for the Indian startup ecosystem and multiple consolidations in the ecosystem are expected to play out in the coming months.