Indian EdTech Sees Slowdown in Funding, Smart Integration Needed to Recover: Tracxn Report Online courses and professional upskilling programs however seem to keep the sector still in the game, taking advantage of the shortcomings of the offline teaching methods.

There has been a considerable decline in EdTech funding in India, failing to match the momentum it once recorded during its boom in 2021, according to a new report by Traxcn Technologies titled 'The Tracxn Feed Geo Report: EdTech India 2024'.

Till date this year, the EdTech sector in India managed to raise a modest US$ 215 million, displaying a mediocre rebound when compared to US$ 321 million secured in 2023. The report reveals that the funding has veered far away from the sector's prime in 2021, when it managed to bag close to US$4.1 billion.

Indian EdTech ecosystem features 11,000 active companies and despite these numbers, the sector shows signs of struggle mainly due to macroeconomic conditions and the return to traditional schooling as educational institutions opened their doors as part of the post-pandemic recovery.

Online courses and professional upskilling programs however seem to keep the sector still in the game, taking advantage of the shortcomings of the offline teaching methods.

The Tracxn report also states that the EdTech sector demonstrated significant resilience in the first half of 2024, witnessing a 96 per cent increase in funding amounting to US$164 million. This is much lower than the peak of Q3 of 2021 when the period saw an overall funding of US$ 2.48 billion. So far in 2024, there has been only a single acquisition of Schoolnet India acquiring Genius Teacher, a mobile-based exam preparation platform.

As observed in the previous years, the majority of funding in this space has been late-stage rounds with 2024 recording US$ 166 million. While early-stage funding recorded US$ 40.4 million, EdTech startups in the seed-stage were only able to raise a meager US$ 8.5 million this year, recording a 76 per cent decrease from the US$ 156 million raised in 2022.

Sub-sectors within EdTech such as the 'Test Prep' which was once considered a funding hotspot with total funding recorded close to US$ 7 billion, have also seen a sharp decline. After seeing a peak at US$ 175 million in 2021, funding has dropped to a low US$ 8.5 million in 2024.

Commenting on the findings, Neha Singh, Co-Founder of Tracxn, said, "While the funding levels are still below the highs of 2021, the sector's growth in 2024 so far indicates a renewed interest from investors, especially as companies transition back to traditional learning methods while incorporating digital innovations."

Top overall investors in the space according to the report are Blume Ventures, Wellfound, and LetsVenture, with seed-stage covered by Inflection Point Ventures, We Founder Circle, and EvolveX having been the most active the past couple of years. In terms of geographical breakup, India's tech capital Bengaluru leads the race, accounting for over 64 per cent of total funds raised, and is closely followed by the NCR and Mumbai.

The muted funding environment might explain why India hasn't seen a new unicorn since 2024, despite being the global leader with six unicorns. The report further states that the Indian EdTech sector is evolving, with a smart swift towards integrating offline and online education to meet the new challenges, with key trends developing with the likes of AI and voice technology in classrooms.