Edtech sector sees signs of recovery in Q2 after 48% plunge in funding this year

The Indian edtech sector displayed signs of recovery even though it saw a 48 per cent slump in funding so far in 2023 compared to the previous year, according to a report by Traxcon, a global market intelligence firm. The latest report provides a valuable insight into India’s Edtech sector, which has been witnessing a funding crisis in the last few months.

The international edtech market has encountered various challenges in recent times that include reduced demand for online education, financial limitations, unprecedented hike in interest rates, and severe economic crisis. This has impacted the edtech sector in India as well. However, the sector has shown excellent resilience and unique growth potential, according to Tracxn's latest Edtech India - Feed Geo report.

Indian Edtech sector's funding trends in 2023  

The Indian edtech sector managed to gather total funding of $973 million between January 1, 2023, and August 7, 2023. However, the reported numbers indicate a plunge of 48 per cent from the year-ago figure of $1.87 billion. Further, the total amount of funds has declined by 50 per cent as compared to the same period in 2021. In addition, the number of funding rounds in this period declined by 77 per cent and 82 per cent compared to the same period in the years 2022 and 2021, respectively.

Late-stage investments that constitute 90 per cent of the total edtech funding were recorded to be $879 million and the number has dropped by 23 per cent compared to the previous year's figure of $1.14 billion. The early-stage investments amount saw a steep fall as the figure stood at $75.7 million, indicating a plunge of 88 per cent compared to the figure of $618 million raised last year during the same period.

Q2 recovery: A ray of hope for Indian Edtech startups

Despite the huge declines in the fundings received by the edtech segment in the country, there is still some hope for recovery as the second-quarter of FY24 proved to be a game-changer for the domain. Most of fundings received by Indian edtech startups were secured in the Q2 of FY24. The second quarter of FY24 saw the sector acquiring fundings worth $713 million, which accounts for a 73.43 per cent of the total fundings so far this year. Moreover, the numbers also indicate a huge increase of 37 per cent compared to the same quarter in 2022.