India’s Edtech Sector Faces Funding Slowdown Amid Market Shifts

New Delhi, Sep 7 (KNN) India's edtech sector continues to feel the effects of a funding winter, with a 30% decline in year-to-date fundraising compared to the same period last year.

From January to August 2024, the sector secured just $215 million in funding, down from $307 million in 2023, according to the Tracxn Feed Geo Report: Edtech India 2024.

Despite this downturn, the Indian edtech ecosystem remains the third-highest funded globally, with approximately 11,000 active companies.

The sector’s current performance, while significantly below the highs of 2021, still reflects a glimmer of hope for investors, especially given the 96% surge in first-half 2024 funding compared to H2 2023.

During the first six months of 2024, edtech firms raised $164 million, a marked improvement over the $81.9 million raised in the last half of 2023.

However, challenges loom large. Macroeconomic headwinds, coupled with a return to traditional learning as schools reopen post-pandemic, have shifted the landscape.

Yet, demand remains for online learning and professional upskilling programs, particularly in areas where traditional education models fall short. These niches offer potential for sustained growth.

The funding decline is stark when viewed against the sector's peak. In Q3 2021, Indian edtech saw a record $2.48 billion raised in a single quarter.

Since then, funding rounds exceeding $100 million have become rare, with only one such round recorded so far in 2024.

Nonetheless, notable deals have emerged, including Avanse’s $120 million round and Lawsikho’s public listing this year.

Late-stage investments in the sector have also plummeted, dropping 94% from 2021 to 2023. Early-stage and seed-stage funding have similarly seen sharp declines, with seed-stage funding in 2024 down by 76% compared to 2022, signalling a more cautious investment environment.

Neha Singh, co-founder of Tracxn, remarked, "While funding levels are still below their peak, the growth seen in 2024 indicates renewed investor interest, especially in companies blending traditional and digital learning models."

(KNN Bureau)