The Indian edtech sector, which once thrived with over $4.7 billion in funding two years ago, has encountered significant hurdles since mid-2022. A recent report by market intelligence firm Tracxn reveals that edtech companies have only managed to secure $971 million in funding until the first week of August 2023. This marks a 50% decline compared to 2021 and a 48% drop compared to 2022. Additionally, the number of funding rounds this year has seen a substantial decrease of 77% and 82% compared to 2022 and 2021, respectively.
Notably, both early and late-stage funding rounds have taken a hit, with early-stage funding dropping by 88% and late-stage funding decreasing by 23%. The sector’s struggles have led to layoffs at prominent edtech firms like Byju’s, which alone let go of over 3,500 employees.
Experts attribute this funding decline to factors such as reduced demand for online education, funding constraints, interest rate increases, and economic uncertainties. However, with potential government support, AI advancements, and internet adoption in tier-2 and tier-3 cities, the sector may still see substantial growth in the future.