Indian Edtech: Plenty of Dates, No Weddings?
Remember the buzz around Indian edtech just a few years ago? Online learning was booming, investors were pouring in money, and companies were snapping each other up left, right, and center. It felt like everyone was getting married in the edtech world!
Fast forward to 2025, and the scene has changed dramatically. While there are still plenty of "courtships" – talks about mergers and acquisitions (M&A) – very few companies are actually "tying the knot." Especially for mid-sized edtech startups, those that have raised some initial funding but aren't yet huge, it's a tough market. They're struggling to find new investors or even bigger companies willing to buy them out.
The Numbers Tell a Story
The shift is stark. In 2021, there were 46 edtech M&A deals worth a whopping $3.36 billion. This year, so far, we've seen just seven deals, totaling a mere $37 million. The average size of these deals has also nosedived – from a hefty $73 million in 2021 to a paltry $5.2 million today. For those mid-stage companies specifically, the drop is even more dramatic: from 50 deals worth $852 million in 2021 to just three deals totaling $9 million this year.
Why the Silence?
So, what's stopping these potential marriages?
- Post-Pandemic Reality: The huge demand for online learning during the pandemic has cooled off. People are back to physical schools and colleges, and the urgency for online solutions isn't as high.
- Investor Money Dries Up: The venture capital that fueled the 2021 boom has largely disappeared. Without easy access to funds, many startups are desperate to sell, but buyers are cautious.
- Valuation Mismatch: This is a big one. Many startups raised money in 2021 when their valuations were sky-high. They still expect those prices, but potential buyers are looking at current market conditions and profitability, which often don't justify those inflated figures. It's like trying to sell a house at 2021 prices in a 2025 market.
- Unsustainable Models: Many smaller edtech companies grew quickly but don't have a solid, profitable business model. Larger players, like upGrad's Ronnie Screwvala, are wary of "buying someone else's problem." They don't want to acquire companies that will just lead to future losses.
- Failed Talks: High-profile acquisition talks, like Physics Wallah's bid for Drishti IAS or Unacademy's efforts to sell Airlearn, have fallen apart due to these disagreements.
A Needed "Shakeout"
Some industry leaders believe the sector needs a "contraction" – meaning many smaller, unsustainable companies might have to shut down. In fact, over 16 funded edtech players have already closed shop since 2021. This "shakeout" could eventually lead to a healthier market where only strong, profitable companies survive, making future M&A deals more meaningful.
While the current scene is quiet, investors do believe that for the truly scaled-up companies (those with $100-500 million valuations and around $25 million in revenue) that are profitable or close to it, M&A activity will pick up in the coming years. For now, though, it seems the Indian edtech sector is still waiting for its wedding bells to ring.
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