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InOpen Tech adds fun to computer science learning eyes Rs 20-cr funding

The IIT Bombay-based start-up has made early inroads may need to widen the product mix

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Students at the in the Thane district of Greater Mumbai are sitting in a makeshift tin shed for a computer class. The 1,200-odd students don’t have the best of physical infrastructure when it comes to computer labs but they would not be missing out on the content delivered to their peers in other schools. Raje Shivaji School has taken the assistance of Computer Masti, the computer science content offered to schools by InOpen Technologies.

An Indian Institute of Technology-Bombay (IIT-B)-based educational start-up, provides computer science content to 300,000 students across 130 schools in India. Their flagship product, Computer Masti, is a programme to teach computer science in schools. A collaborative product of IIT-B and InOpen, Computer Masti consists of a graded text book, with the support of teacher training and assessments.

In a segment where high-end technology and expensive product offerings are essential features, InOpen concentrates on offering a simple product — a computer science book for school students. At a minimum price of Rs 160 a child per year, affordability has also been an important factor.

“Though InOpen is a start-up, they have ensured adequate training to each teacher associated with their product in school. This distinguishes them from other companies in the segment,” said the head of a venture capital (VC) fund, requesting anonymity.

Within three years of operation, it has achieved profits, clocking revenue of Rs 2.32 crore in FY12, compared to just Rs 70 lakh the year before. InOpen is also widening its product offering into the pure sciences curriculum, by acquiring a science content called ‘Small Science’ from the Homi Bhabha Centre for Science Education. At IIT-B, it is a closely followed firm for its steady growth and ability to make profits in a small duration.

The beginning
Rupesh Shah, chief executive and co-founder of the company, was doing research at IIT-B when he developed a Linux-based operating system called Intux. During research, Shah wanted to develop an application that could be used for strengthening the educational content segment.

Computer science was a subject close to Shah’s heart. His background helped him lead the company’s efforts towards creating educational solutions that focused on creating content that could be universally accepted and deployed across varied infrastructure.

He then joined hands with Sridhar Iyer, a professor in the department of computer science and engineering at IIT-B. They conducted experiments across schools to understand the needs and requirements. Computer science was mandatory in schools; their effort was to make schools understand that it needed to be taught in a manner which was engaging and informative at the same time.

The company was formally incorporated in October 2009 and incubated at the Society for Innovation and Entrepreneurship at IIT-B. Starting with seed capital of Rs 25 lakh, it got a boost when State Bank of India lent Rs 50 lakh without any collateral in August 2010, while VC fund VenturEast invested $500,000 last year. Founders Shah and Iyer own majority stake while IIT-B has a small minority stake.

Product proposition
The speciality of the product is the Masti (fun in Hindi) factor in the textbooks, available for students in Class I to Class VIII. All programmes and content are presented in a narrative format through two child characters — Tejas and Jyoti. Colourful pictures, worksheets and interactive lessons are an inherent part of the textbook for each level.

The lessons are based on free and open source software. The Computer Masti toolkit can be installed on commonly used operating systems. “The biggest problem we found was there was a standard format to teach computer science. We decided to go against this norm and have customised content for each school,” says Shah.

Business model
It has two revenue streams: schools and governments. Schools — it supplies content, teachers and system administrators — account for two-thirds of its revenue while the rest comes from state governments. InOpen works with the governments of Assam and Bihar to teach government school students and junior employees. A low price point helps both schools as well as the firm win new contracts. “Unless they increase prices by 50-60 per cent in a few years, it would be difficult to sustain the business,” said the head of an education firm involved in deploying smart technology to classrooms.

“While InOpen may have achieved moderate success with low price and quality content, there is a long way to go in government contracts, where they expect multiple offerings at one price,” said a senior executive at an education firm. Others in this market include NIIT, Educomp, Everonn, Tata Interactive Systems and Birla Shloka Edutech, which have been in the market for eight to 10 years.

Initial challenges
The company started with very few schools as partners. “I borrowed some money from friends to develop and expand the company in the initial phases,” recalls Shah. As it scales up, attrition and cost of talent could be an issue. “Scaling from 0 to 10 is not an issue. But when the team moves from 10 to 20, that is where the challenge is reflected. With new ideas and teams, it is difficult to retain people. And, as the team grows from 30 to 50, the hike in salary bill is significant and you need the cash flow,” he says.

Shah was lucky, as IIT-B helped develop the content. Today, it has 62 people and is expanding the team across India. During mid-2011, the company felt the need for additional funds to drive the business. At this point, VenturEast saw its potential and invested $500,000 in a seed round for a minority stake. Now, InOpen is planning to raise Rs 20 crore.

Says Sateesh Andra, managing partner, VenturEast Tenet Fund: “InOpen’s biggest strength is its curriculum, available in both print and digital formats. Another big positive is that the company is very focused towards one area — computer science.”

Scaling up
InOpen achieved break-even in FY2012, and has seen three times growth from 2010-11. “We have to sustain ourselves in this business. We are not here to do short-term business, make profits and exit,” explains Shah. InOpen has offices in Mumbai, Hyderabad and Jaipur, and will soon open one in Bangalore. Shah expects revenue to double this financial year, and hopes to reach a million students by the end of 2013. He estimates the market for computer content in schools to be $100 million.

Since InOpen offers content in Arabic and Bengali, Shah plans to target countries in West Asia and Bangladesh, and is in active talks with schools in those regions. It is also in discussions with the Goa government to introduce its content to government employees and schools. InOpen would soon develop an application for Computer Masti and offer content on the cloud by May 2013.

Notwithstanding its success, experts feel unless the company extends services to include other subjects, it would find it difficult to survive. “To scale up, InOpen would need to expand its presence in the education segment, to the non K-12 (kindergarten to Class XII) segment,’’ says the product head of an edu-training firm. Shah, however, maintains that if he is able to get the right staff, he will be able to scale up faster.

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