GSV Ventures to invest more in India’s battered edtech sector

Bengaluru: US-based GSV Ventures, which invests solely in edtech companies around the world, said it plans to make additional investments in India’s beleaguered edtech sector, which has seen huge layoffs amid a prolonged funding winter.

The venture capital firm, which has invested in Indian startups such as PhysicsWallah, Classplus, Apna and LEAD School, is upbeat about the edtech sector, which has been struggling to raise funds amid a global economic slowdown. GSV manages assets worth about $800 million.

Technology startups worldwide have been struggling to raise funds since covid subsided, and Indian companies have been no exception, Deborah Quazzo, managing partner at GSV Ventures, told Mint over email. Funding for Indian edtech startups fell to $297.3 million in 2023 from $2.6 billion in 2022, according to data collected by Tracxn.

India’s edtech sector saw huge growth at the height of the pandemic as lockdowns forced schools and colleges to harness online learning. However, with a return to pre-pandemic lifestyles, the industry suffered a downturn as demand for its services waned.

“A number of companies also ran into challenges related to CAC (customer acquisition cost). There will always be cycles,” Quazzo said, adding that the cost of acquiring students can often hamper business models.

Byju’s – once India’s highest-valued startup – Unacademy and Vedantu are among the companies that have faced the brunt of the slowdown, which has pushed investors and firms to pursue alternatives such as physical tuition centres and other offline modes of learning. “We have and are open to investing in hybrid learning,” Quazzo said.

Despite the state of the sector, GSV’s outlook remains unwavering. The VC firm sees education and skills as long-tail investment themes driven by rising demand and a growing middle-class, and has made investments across ‘Pre-K to gray’ education. Its portfolio includes US companies such as Coursera, MasterClass and ClassDojo, among others.

Quazzo also attributed her optimism to the Indian government’s strong interest in the sector, as evidenced by the National Education Policy (NEP), which aims to make pre-primary and foundational education accessible to all. India also benefits from rising digitisation and a young population.

“We continue to look at many opportunities across the India landscape,” Quazzo said, adding that a high return on education over the long term will drive a high return on investment.