Outlook 2025: Funding crash, layoffs shift edtech's focus on innovation

The ed-tech sector, however, was once referred to as the poster child of the country's startup landscape

The Indian edtech sector faced a turbulent 2024, marked by leadership exits, mass layoffs, and restructuring efforts. According to Venture Intelligence, edtech funding stood at $608 million in 2024, significantly less than $4.1 billion in 2021. 

 

As 2025 begins, experts say the sector has a chance to rebuild by focusing on personalisation, impact-driven solutions, and better governance.

 

Shailesh Haribhakti, a management expert, said the 2024 downturn has paved the way for sensible approaches and stronger governance.

 

“We will see a much stronger edtech sector emerging. The focus will be on catering to personalised learning needs, allowing individuals to learn at different levels and on varied subjects. This will be the leading area where the sector will make its innovation,” Haribhakti said.

 

Echoing similar sentiment, policy researcher and corporate advisor Srinath Sridharan highlighted the need for edtech companies to rethink their strategies.

 

“These companies must personalise programs for individuals and similar cohorts. They have to focus on impact rather than just outcomes,” he said, suggesting gamification as a way to enhance personalisation and engagement in the sector. 

 

  While Haribhakti remains optimistic about edtech’s outlook for this year, business strategist and angel investor Lloyd Mathias predicted a flat to sluggish trajectory.

 

The edtech sector, once a shining star in the country’s startup ecosystem, experienced a rise during the Covid-19 pandemic. The shift to online learning as schools and universities shut down drove exponential growth, Mathias said. The sector raised $4.1 billion in 2021, its highest-funded year, according to the Tracxn Feed Geo Report: Ed-Tech India 2024.

 

Between 2018 and 2022, PhysicsWallah, Eruditus, upGrad, Vedantu, and Byju’s achieved unicorn status. According to the Internet and Mobile Association of India, over 75,000 jobs were created in this sector. However, as the pandemic waned and offline education returned, funding dried up, triggering restructuring and widespread layoffs.

 

Byju’s, a major player, announced restructuring after the company’s India chief executive officer Arjun Mohan resigned in 2023, laying off over 500 employees. The edtech firm had earlier handed pink slips to more than 10,000 staffers. Legal and debt troubles, financial losses, and a sharp decline in valuation added to its woes.

 

Mathias, who sits on the boards of nearly half a dozen companies, said Byju’s contributed significantly to the bad news surrounding edtech. He added that as several investors burnt their fingers, the Byju’s fiasco led to a rethinking of business and governance models across the sector.

 

 While several edtech firms continue to face challenges and opportunities, Stoa School, an alternate business education platform, and Bluelearn, an upskilling and job search platform, shuttered operations in 2024. 

 

Other firms like Unacademy and upGrad also streamlined operations, reflecting the broader trend of restructuring.