Edtech is struggling, but not the loan enablers: Entrackr Report

The edtech sector has faced challenges since the post-pandemic period, during which startups in the space raised nearly $6 billion and several reached unicorn status. The crisis at Byju’s had a disruptive impact on the broader edtech landscape, followed by workforce reductions at companies like Unacademy and Vedantu. Apart from PhysicsWallah's IPO and a few major funding rounds involving firms like Eruditus and upGrad, the sector has seen limited notable activity since January 2024. In contrast, fintech startups focused on education have expanded their presence over the past 18 months.

According to data compiled by TheKredible, edtech startups have raised $1.2 billion since 2024. Interestingly, more than 35% of this funding, or $424 million, has gone to startups that focus on providing education loans. This shows that while overall investor interest in edtech has slowed down, there is still strong demand for such edu-fintech platforms that help students and parents manage the rising cost of education through financing solutions.

Top funded edu-fintech startups since Jan 2024

Leap Finance took the lead with $165 million raised in two rounds. This included $100 million in debt and $65 million in a mix of primary and secondary capital, with Apis Partners as the lead investor. Both rounds took place in 2025. Avanse, an education-focused non-banking financial company (NBFC), secured $117 million (Rs 1,000 Cr) in primary capital from Mubadala Investment. Mumbai-based Auxilo closed $48 million through three rounds in 2024, which included $18 million in debt raised through two rounds.

Another notable fundraise includes Bengaluru-based Varthana raising $42.25 million across 4 rounds and Propelld’s $25 million debt round, Mumbai-based GrayQuest, education loan marketplace startup GyanDhan, Invest4Edu and Lorien Finance.

Year-on-Year funding trend

The education-focused fintech startup sector has undergone a significant shift in recent years. In 2021, the sector attracted over $100 million in funding, with startups like Eduvanz, Leap, and Leverage Edu raising capital across multiple rounds. By 2022, momentum picked up, and funding grew to around $169 million. However, in 2023, investments dropped sharply by over 55% to $76 million. Since 2024, the sector showed signs of recovery, as venture funding rose to $424 million.

Financial performance of edu-fintech startups in FY24

In FY24, Avanse led the sector with an operating revenue of Rs 1,726 crore, followed by Auxilo, Varthana, Leap, and Propelld, which reported revenues of Rs 357 crore, Rs 278 crore, Rs 201 crore, and Rs 82 crore, respectively. More than half of these startups, including Greyquest, Leap, and Auxilo, recorded revenue growth exceeding 100% compared to the previous fiscal year (FY23).

On the profitability front, Avanse reported the highest profit at Rs 332.5 crore, with Auxilo and Varthana posting profits of Rs 69.2 crore and Rs 31 crore, respectively. In contrast, Leap (Rs 21.6 crore loss), Propelld (Rs 43.14 crore loss), and Greyquest (Rs 36.8 crore loss) reported losses during the same period. However, these losses remain lower compared to those of core edtech companies. Notably, none of the edu-fintech startups have reported layoffs since January 2024.

Conclusion

In a country where the Right to Education was a right granted after a long wait, and basic literacy remains an issue, the rush into edtech and more recently edtech-linked fintechs was easily explained. It was the sheer size of the market, which left spaces for all sorts of providers. But what will worry, or should worry their backers is the spread into more and more sectors of the education sector. The cost of a ‘good’ education in India has also grown at a rate far higher than inflation, and is causing serious discomfort to more people than perhaps the government realises. While a broad backlash is not visible yet, we wouldn’t count against it as election time approaches by 2029. That is also enough time for many of the students who have taken loans for education to find out if the loans, or the education has been worth it in terms of the quality of jobs they get. Enough has been written about the shockingly stagnant entry level salaries in the IT sector for over 15 years, for instance, even as the cost of getting an education to qualify for one has gone up over 3X. 

We have always been bullish about the prospects in the professional education sector, where employees fund themselves for a clear objective or their employers do it. But the spread into graduate and undergraduate education is fraught with risks that are significantly understated presently.