Sir Isaac Newton once said: “what goes up must come down.” The phrase, perhaps, aptly captures the many tribulations currently gripping the edtech space — layoffs, funding crunch, business headwinds emerging from the threat of curtailed growth in the post-pandemic world. True, an unsettling macro-economic environment has touched start-ups of all hues, but edtech players, especially those operating in the K-12 space have the daunting task of weaning students away from classrooms and playgrounds and sustaining their interest in online learning. The sector is different from food delivery or e-tail businesses that continue to ride on consumers’ knack for the convenience of having doorstep deliveries. The edtech segment did deliver a unicorn, PhysicsWallah, amid all the gloom, but when the market leader is mired in a spate of discouraging developments, it doesn’t bode well for the space, at least in terms of assessing the sectoral credibility.
Byju’s, the most valued Indian start-up with a valuation of $22 billion that went overboard on acquisitions over the past couple of years, helped by heavy investor funding to the tune of over $2 billion since the start of the pandemic, laid off about 500 employees working with group companies WhiteHat Jr and Toppr. The Bengaluru-based firm is also fighting allegations of having association with investors with questionable identities like Sumeru Ventures and Oxshott Capital Partners, who are yet to infuse some $250 million into the company committed months back. Byju’s has attributed the delay to ‘macroeconomic changes’. It is understood that the investment in Byju’s is the only transaction Oxshott Capital Partners has made thus far. Quite along similar lines, Sumeru Ventures, which was launched in 2018 has reportedly made three investments only in 2022, having been inactive for the best part of its existence. Recently, Congress MP Karti Chidambaram pointed out these anomalies in a letter to the government’s serious fraud probe agency seeking an investigation into the start-up’s finances.
Conversations with the start-up’s past and present employees indicate that certain business verticals may be staring at a subdued growth. A technical support executive at WhiteHat Jr who got laid off in the recent downsizing exercise says that company (WhiteHat Jr) sales have dipped. Besides, with the reopening of schools and return of students to offline coaching classes, children are finding it difficult to accommodate additional online classes. “Most of the students are now occupied. Also, a large proportion of learners who can afford WhiteHat Jr courses have already been covered during Covid,” says the past employee who did not wish to be identified. He also says that a lot of the processes have been automated, leading to job cuts.
WhiteHat Jr that was acquired by Byju’s in a $300 million deal in August 2020 offers online courses in coding, mathematics, music, art, animation and video. The firm’s website shows that a music curriculum under the novice level comprising 48 classes costs as much as ₹49,999. A Pune-based couple who had enrolled their eight-year-old daughter for coding classes at WhiteHat Jr during the lockdown did not renew the three-month subscription package once the learning tenure got over. For one, the child’s mother feels that coding as a subject has limited scope for regular application. Also, reopening of schools made it imperative to prioritise school education. “During lockdown, my daughter had time but now she needs to focus on her studies. She is anyway being taught computers in the school and soon she will commence her practical classes. So, I don’t see much value in coding,” says the child’s mother on condition of anonymity.
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