An RBSA report in April 2021, the size of India’s edtech industry is expected to grow at a CAGR of around 15% to $30 billion in the next ten years. Some companies have seen their userbase double since the pandemic, and the online mode of education went from being an exception to the norm. With a rapid growth rate came significant investments. The industry has attracted $4 billion in the last five years from big names like SoftBank, Tiger Global, and others, giving rise to unicorns like Byju’s and Unacademy and rising stars like UpGrad.
What is UpGrad:
Many edtech companies in India focus on K-12 and test prep markets. UpGrad decided to focus on a different niche of undergraduate and graduate students looking to develop a particular skill to get an added advantage in obtaining a job or getting into a dream college for higher education.
The programs offered include courses on data science, machine learning, digital marketing, blockchain technology, MBA, and many others. The curriculum for these courses is developed in collaboration with A-list universities like IITs and IIMs, among other national and international universities.
How was UpGrad born:
The idea of making a platform for skilled learners came to Mayank Kumar, Co-founder of UpGrad, when he was the VP of Education at Bertelsmann (Europe’s largest media and education conglomerate).
Given the rapidly rising working population of India and reports stating that 70% of Indian graduates are “not employable”, companies are facing a shortage of digital talents and data scientists; Mayank foresaw that the demand for upskilling through technical certifications is high and launched UpGrad in 2015 with Phalgun Kompalli, Ravijot Chugh, and the veteran entrepreneur Ronnie Screwvala.
The journey so far:
In a short span of 5 years, UpGrad went from acquiring its first 100 learners through offering free material to over 40,000 learners and 1 million users across different offerings, partnered with over 100 colleges, and universities and has over 300 hiring partners despite hesitation towards obtaining an online degree and its acceptance. It forecasts to reach 2 million users within the next 18 months.
With over 100 courses and 5,000 hours of content on the platform and almost tripling it to over 13,000 by FY 21, it has become India’s biggest online higher education platform. The revenues of the company also multiplied in these years from Rs. 57 Crores ($7.8 million) in FY 18 to Rs. 163 Crores ($22.4 million) in FY 20.
The pandemic has proven to be a boon to all the edtech players as they saw their user base double in the first ten months of lockdown. Consequently, UpGrad reached an Annual Revenue Run Rate (ARR) of Rs. 1200 crore ($161 million) in FY 21 as it clocked revenue of Rs. 100 crore in March 2021 alone despite having the highest Average Revenue Per User (ARPU) and targeting Rs. 2500 crore ($335 million) in FY 22 through international expansion and strategic acquisitions to reach $2 billion by FY 26.
It is not a surprise that UpGrad is not profitable yet. None of the edtech platforms are near a green mark yet, thanks to the heavy adverts to acquire new customers. UpGrad carried out heavy promotion in 2019 through celebrities & Hotstar looking to create awareness by taking advantage of young IPL watchers. It also continued investing heavily in new courses and incurred a nominal loss in FY 20 with a break-even and profitability insight by the second quarter of FY 22.
In 2017, UpGrad partnered with ‘Startup India’ to develop a free online entrepreneurship course called ‘Startup India Learning Program.’
UpGrad is essentially a B2C play, but it also has an enterprise model where companies pay the platform for retraining their employees.
Funding & acquisitions:
UpGrad has managed to achieve a near-unicorn $850 million valuation with a debt financing of Rs. 500 crore ($6.84 million) in August 2020 and another $169 million in venture rounds by World Bank’s International Finance Corporation, Singapore’s sovereign wealth fund Temasek Holdings, and Unilazer Ventures (Ronnie Screwvala’s venture capital firm) in April 2021 and is planning to add 1000 employees to its team of 400 in the coming quarter.
Strategic acquisitions have played a vital role in the inorganic growth of the startup. Between 2016 and 2020, UpGrad acquired Pyoopil Education Technologies, AcadView, CohortPlus, The Gate Academy, and Rekrut India to improve its products and offerings and make the platform more inclusive.
The latest acquisition was Impartus, a video-learning solutions provider for Rs. 150 crore ($20.6 million) in May 2021.
Coach, Content, & Career - CCC:
Coined by Screwvala, the CCC approach is at the core of UpGrad’s journey so far and its ongoing success.
UpGrad has successfully onboarded over 200 industry experts and faculty members from top-tier colleges to ensure the learners on the platform get the best tutor possible. They developed courses in partnership to create content that is up to date, industry-relevant, and engaging.
The average rating of a session is 4.55 out of 5, and investments are made constantly to get better content on the platform. The course completion rate on UpGrad is 80% compared to 3-6% of other Massive Open Online Courses (MOOCs).
The feature that separates UpGrad from competitors like Coursera, Edureka, or Unacademy is the one-to-one mentorship and guidance offered by the ‘student success’ team. A student mentor is assigned who gets in touch with incumbents once they are assigned a batch for their program. This feature was never possible in traditional colleges!
Future outlook:
Sundar Pichai, CEO of Alphabet, said in a recent report that 50% of all employees would need reskilling by 2025. Google, among other top employers, has started accepting online certifications in place of traditional degrees. This has a significant impact on students’ decisions as colleges get more expensive by the year. They will now choose to take a conventional route to a college degree or opt for an online degree for a fraction of a price.
The outlook seems to be reasonably optimistic as the pandemic has eliminated the hesitation of opting in for an online degree to a large extent. With the highest population in India being 54.6% of people between the age of 20 and 59 and rapidly growing internet penetration, the opportunity is undoubtedly immense. How they will be able to expand and sustain the model will be a test of time.
That said, the problem with providing skills required in high-demand, high-paying jobs at scale and making it accessible to virtually anyone can create another set of problems. The shortage of employees with relevant skillsets could soon be saturated; for example, data scientists will now be graduating by thousands with online degrees and certifications but, the number of jobs is limited. The status of these high-paying jobs will deteriorate as fresh graduates will be ready to work for a lesser pay due to increased competition.
For better or worse, edtech platforms will undoubtedly change how the future generation acquires skills, graduates, and finds jobs.
“Edtech platforms do have the power to transform the traditional graduation and post-graduation culture from colleges.” -Ronnie Screwvala.
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This post was written in collaboration with Asif Yahiya Sukri LLP. Asif Yahiya Sukri LLP provides unparalleled personalized financial services to a broad range of clients across different geographical locations. With a presence in the USA, India and the MENA region, they ensure that all of your financial decisions are made carefully and with your best interests in mind. They are innovators who understand what goes into building companies.
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Sources:
- https://www.crunchbase.com/organization/upgrad/company_financials
- https://www.upgrad.com
- https://telecom.economictimes.indiatimes.com/news/pichai-unveils-new-efforts-to-reskill-millions-of-job-seekers/81495803
- https://economictimes.indiatimes.com/tech/technology/indian-edtech-industrys-market-size-to-reach-30-billion-in-10-years-report/articleshow/82295097.cms
- https://economictimes.indiatimes.com/industry/services/education/acceleration-in-edutech-growth-will-sustain-post-covid-19-etilc-members/articleshow/81226089.cms?from=mdr\
- https://www.livemint.com/brand-stories/coach-content-career-upgrad-s-success-mantra-ronnie-screwvala-11594812312976.html
- https://startuptalky.com/upgrad-success-story/#upGrad_-_Latest_News_
- https://www.youtube.com/watch?v=MTdpHs6HWwM&t=16s
