Bengaluru Leads the Way in Indian EdTech Funding Despite Dip

The Indian EdTech sector has faced a significant dip in funding, experiencing a 48 percent reduction in investment from January 1 to August 7, 2023, compared to the previous year. Despite this decline, Bengaluru has emerged as the leader in EdTech funding. According to the EdTech India – Feed Geo Report, EdTech startups in Bengaluru have raised over $8 billion as of August 7, 2023, surpassing other cities like Mumbai ($2.5 billion) and Gurgaon ($497 million).

The total funding for the sector in 2023, during this period, amounted to $971 million, compared to $1.87 billion in the previous year. The number of funding rounds also saw a significant decrease, dropping by 77 percent compared to the same period in 2022 and 82 percent compared to 2021.

Despite the decrease in funding, the Indian EdTech sector remains one of the top three funded geographies in 2023, following the U.S. The global EdTech market, like its Indian counterpart, has faced challenges due to reduced demand for online education, funding constraints, rising interest rates, and economic uncertainties. However, the report suggests that the Indian EdTech sector shows promise due to the demand-supply gap between teachers and course availability in offline education, which may drive growth in the future.

Most of the funding in Indian EdTech startups in 2023 was secured in the second quarter, accounting for 73.43 percent of the total funding raised. This represents a 37 percent increase compared to the same quarter in the previous year. Key segments in the EdTech sector based on funding include K-12 EdTech, Test Preparation Tech, and Higher Education Tech.

While the K-12 EdTech startups have raised $711 million in 2023, there has been a decline of 45 percent compared to the same period in 2022. Notably, no new Unicorns have emerged in the sector this year, in contrast to two new Unicorns in the same period the previous year. The year 2023 has witnessed seven acquisitions, a 70 percent decline compared to 23 acquisitions in 2022 and 19 in 2021.

The report also highlights the most active investors in the EdTech space, with We Founder Circle, Peak XV Partners, and MMPL Trust leading the way. The Indian EdTech sector has showcased resilience during the pandemic, leveraging the increasing internet and mobile device penetration in rural areas. Despite current challenges, there is optimism about the EdTech sector”s role in transforming education in India.