May 2025 | Athera's Odyssey: EdTech, Beyond the Boom
Understanding innovation, potential and pitfalls in India's EdTech industry
Odyssey readers,
During COVID, headlines regularly announced the EdTech industry’s dramatic rise. Companies grew astronomically, capitalising on captive learners at home. India, particularly, became a darling for investors, birthing unicorn after unicorn.
Since 2023, though, things have changed. Deals and valuations are down; behemoths that emerged crumbled under the weight of their promises. Yet, the industry persists, and technology’s only becoming more integral to learning.
To help you understand what happened, where we’re at, and what the future looks like, we’ve got
Olina Banerji (The Ken), a seasoned journalist who’s seen the industry boom, bust, and settle into a new status quo
Pranav Kothari (Ei), CEO of the ‘OG EdTech’ that’s grown steadily for 25 years outside the limelight
Abhishek Mishra (GSV Ventures/PhysicsWallah), an operator-turned-investor talking through the intricacies of funding in this sector full of potential and pitfalls
But first, a 100-word roundup of what our portfolio’s been up to
We’re co-leading Hyperbots’ - agentic AI for finance & accounting - $6.5 million Series A to support their US expansion and AI development.
Our long-time bet, Euler Motors, raised a ₹638 crore Series D round led by Hero MotoCorp & BII to to accelerate the electrification of logistics at scale.
MoveinSync acquired eFmFm, making it the first company to move over a million employees daily.
PB Healthcare, an affiliate of PB Fintech, raised $218 million seed funding to establish a hospital network, creating a truly integrated healthcare ecosystem.
The view from the sidelines
Indian EdTech’s potential and pitfalls
When the COVID-19 pandemic forced children to learn from home, ‘EdTech’ – short for education technology – took centre stage.
In India, the sector boomed almost overnight, with parents eager that their children’s learning be minimally disrupted. The country quickly became known as the world’s EdTech capital, with startups drawing massive funding and attention.
“At the ASU + GSV Summit [one of the world’s largest EdTech gatherings] in 2022, India felt like an EdTech powerhouse,” starts Olina Banerji, writer of Ed Set Go, The Ken’s weekly newsletter on education.
“Panels were dedicated to Indian companies, their innovation, frugality, and valuations. There was huge potential – we had a young population, internet penetration, willingness to spend on education, and a system amenable to test prep.”
These expectations fuelled funding, which fuelled India’s reputation.
Behind the glitz were uncomfortable questions few asked, Banerji says. “Who are your customers, and can they afford your product? Are you innovating—or just digitally replicating offline models?”
The biggest question, of course, was profitability. “Venture Capitalists (VCs) prioritized growth, initially, but we who covered the sector wondered. When kids returned to school in 2022 and many models crashed, we weren’t surprised.”
Lofty valuations and flamboyant promises proved hard to live up to. “Parents were sold dreams of their children becoming coders at Google,” Banerji notes, “but when they asked companies what their kids were actually learning, they didn’t get clear answers.”
She doesn’t entirely blame EdTechs for this. “There aren’t easy metrics for success for EdTech. You can’t prove a child scored well on an exam because of a learning software. Some companies like Ei (Educational Initiatives) use conceptual clarity as a metric, but that’s not easy to communicate."
Limited oversight also caused this, Banerji believes. “Investors focussed on market size and users, not questioning unethical sales practices or millions spent on ads. But when things turned, corporate governance and spending patterns were suddenly scrutinized.”
These factors - angry customers, aggressive spending, inadequate oversight, and school reopenings – ended this frenzy and sunk eye-watering valuations of behemoths like Byju’s, once valued at over $22 billion.
Adapting to a new status quo
Despite these developments, Banerji thinks EdTech’s potential remains intact.
“We need to separate EdTech from companies,” she continues. “Parents and schools want software that helps children learn. But attaching a company and price tag will create some concern about where their money is going.”
To convince them, companies need to adapt to what she calls ‘EdTech 3.0’.
“EdTech 1.0 was pre-pandemic. Companies were experimenting, and seeing what stuck,” she clarifies.
“EdTech 2.0 began with COVID. With a captive audience of online learners, companies were confident that people wouldn’t return to traditional offline models.”
“Post-pandemic, in 3.0, they know there’s a market, but need to work for it.”
Earlier, EdTechs provoked a fear of being left behind to sell products. With power dynamics shifting, Banerji sees them becoming reserved in their pitch.
“PhysicsWallah, for example, has a clear message,” she explains. “They aren’t saying you’ll become a genius. They’re addressing the grassroots dream of cracking a life-changing exam and make no bones about being a test-prep shop.”
“LEAD School promotes themselves functionally,” she continues. “They claim to make schools efficient, improve teaching quality and get better year-on-year results. Eruditus, which targets professionals – doesn’t spend on TV ads. It markets with precision.”
This focus extends to business models. “We’re at the end of the ‘everything EdTech’, where companies tried capturing every segment,” Banerji notes. “Success requires doing a few things well. Companies can still expand, but should move slowly and into allied spaces.”
“PhysicsWallah, for example, started with test-prep, then moved into careers, tech education, and now K-12. There’s a logical sequence there. They’re our best bet at an EdTech succeeding, but they’ll need to learn from others’ mistakes.”
Improving investment
Investors are similarly cautious and far more scrutinizing in this new landscape, reflected in lower deal volumes and valuations.
“I don’t think we’ll see a $22 billion valuation like Byju’s again,” Banerji remarks. “Even PhysicsWallah, currently India’s most valuable EdTech, is worth only $2.8 billion - and hasn’t generated significant returns yet.”
Flashy spending is also out. “No VC will pay for Lionel Messi to market products or endorse fictional characters like Wolf Gupta again.”
This wariness extends to the kind of products funded. “In 2021, everything that was earlier offline, including robotics and classical music, had an ‘EdTech’ spin. Companies tried and failed to thrive in niches, especially since many were already served by YouTube creators. VCs won’t fund this anymore, and want a clear approach to a large market.”
They’re also more discerning in the founders they back. Banerji cites Michael Moe, Managing Partner of GSV Ventures, focussing on founders with a good backstory, passion, and vision. “They’re also keen on AI,” she continues. “Again, Michael Moe said that if companies weren’t thinking about AI meaningfully, they shouldn’t be in EdTech.”
The enthusiasm for India hasn’t dimmed. She recently quoted a senior figure at a large former Byju’s investor who highlighted India’s smartphone penetration and scale, viewing it as fertile ground for further capital investment.
Still, she urges nuance here. “VCs believe in India’s frugal innovation and willingness to pay for education. But smartphone and internet penetration isn’t enough. The Indian market has potential, but investors need to encourage more innovation on the ‘tech’ side of ‘EdTech’. We’re still replicating offline learning, not adapting pedagogy to leverage technology enough.”
Working with schools and the system
As children return to classrooms, EdTech companies face a tough question: can they work with schools instead of around them?
“I do see potential in working with teachers and schools, but no one’s aced this in India yet,” Banerji notes. “Ei, ConveGenius and LEAD are trying. But finding good price points for schools, parents and companies is tricky and conversions are slow, so this isn’t VC-friendly. Also, approaching schools after ignoring them during the pandemic isn’t easy.”
Implementing EdTech across an entire system is even harder. Policymakers sense that devices alone won’t improve learning, but state investment in software is complicated.
“Governments like hard metrics like number of devices; accounting for potential learning gains through software isn’t easy,” Banerji clarifies. “They’re also extremely price sensitive. The process is slow - you need to convince them, apply for tenders, establish infrastructure, and prove outcomes. Also, if priorities change with new government officials, you’re back to square one.”
“Again, this isn’t VC friendly, so non-profits or social impact entrepreneurs tend to target this segment.”
The makings of success
Having witnessed companies – and the entire industry – go through booms, busts, and establish a new status quo, Banerji’s found certain principles that enable success.
“Know and focus on your key audience,” she emphasises. “Don’t try K-12, test prep, coding, and upskilling all at once. You can still grow into new domains over time. But also, don’t go so niche that you can’t scale at all.”
“Second, cut the hype,” she continues. “If you make false promises, you’ll fizzle out. It’s why Great Learning, a rare successful Byju’s company, grew despite chaos. They knew their customers, worked out unit economics, and flew under the radar.”
“Finally, real technological innovation can succeed — especially with AI,” she says. “It’s not enough to build a chatbot. The real challenge is truly personalising learning. Can you create individual lessons and adapt to different learning styles?”
“In the US, personal tutors are prohibitively expensive. India’s sheer diversity makes reaching learners at their level a game-changer. Even schools are interested, since students already use AI tools. Help educators integrate them meaningfully, and the opportunity is massive,” she concludes.
Growing through uncertainty
The early days
When Pranav Kothari, CEO of Ei (Educational Initiatives), joined the company in 2012, technology was alien to Indian education. In the era of 2G/3G connectivity and limited device access, such experiments were met with either disinterest or fear.
“Teachers saw a wire going from the computer to the mouse and thought they would get an electrical shock!” he says. “Parents thought these were just games. Senior government officials, happy with their own education, didn’t think today’s children needed anything different. They didn’t recognise their privilege, and how it didn’t represent most students’ experience.”
In this environment, Ei pushed the envelope by launching Ei Mindspark, their Personalised Adaptive Learning (PAL) software, in 2009, later earning them the humorous moniker of ‘the OG EdTech’.
Though a few private schools adopted it and Ei launched a pilot project in Delhi’s slums, real momentum built in 2017 when the Global Innovation Fund funded public school implementation in Rajasthan and P&G’s CSR team wrote them their first cheque.
“Before that, I had 50 CSRs say no and needed stunning results from the Delhi study to win the GIF grant!” Kothari remarked.
That study, conducted by JPAL, found significant learning gains for Ei Mindspark users over just 4.5 months. It’s the most cited study on EdTech, a pioneer in proving technology’s positive learning impact.
Pivoting for the pandemic
Till 2020, Ei primarily worked directly with schools. In lockdown, they needed to adapt.
“Ei Mindspark was originally developed for computers with a mouse and keyboard,” Kothari said. “But few students had this at home, so we built mobile apps, and created low-bandwidth versions for students from low-income backgrounds. Because philanthropists feared significant learning loss for these students, they funded Ei Mindspark’s translation into 5 more vernacular languages [addition to the existing 4], enabling exponential access.”
The pivots weren’t just technological. Determined to reach students from low-income backgrounds, their teams travelled door-to-door across villages with laptops and tablets, established travelling community hubs, and helped children use Ei Mindspark.
“To smoothen the transition for private schools, we enabled free Ei Mindspark access, registering hundreds of new schools of several thousand students,” Kothari adds.
“People saw our value, because remote schooling otherwise meant sending worksheets over WhatsApp or conducting lessons for 40 black boxes on video calls because students, fatigued by screen time, would turn off cameras. That was EdTech at its worst and fuelled the rise of B2C products.”
Consequences of collapsing behemoths
Many COVID-era B2C products eventually faltered due to suspect quality, questionable sales tactics, and school reopenings. Companies with meteoric rises burnt out equally fast. But Kothari doesn’t believe this collapse has discredited the sector.
“Before COVID, people questioned whether tech was necessary for learning,” he says. “During, COVID they were forced to use it. Now, they’re open to it, but look for tools that enable genuine learning gains. The conversation has improved - which EdTech is useful for what purpose, under what circumstances, and how does it complement human teachers?”
“Every industry has companies that overpromise and underdeliver,” he emphasises. “But Ei spent two decades creating value for schools. No pressure tactics or underhanded dealings. I don’t get bad vibes from schools or donors, because people recognise this and won’t blindly discredit the entire sector.”
Enabling systemic change
For Ei, improving learning at scale means working with governments. This is easier said than done, especially with few companies lobbying for this. “The first tender for PAL procurement by the Chhattisgarh government was cancelled because we were the only applicant,” Kothari notes.
“But there’s more,” he continues. “Governments are more inclined to procure hardware like smartboards, despite no evidence of learning gains, because they’re easier to account for. It’s also easier to convince parents on visually enticing smartboards than intangible learning gains.”
He is sympathetic towards government officials, though. “With software, it’s hard to tell the wheat from the chaff. Demonstrations can’t prove long-term effectiveness and there’s no standardisation across providers,” he admits.
“When buying a computer, you know what a particular processor, a certain amount of RAM, or different operating system can do. With EdTech, there’s no standard framework to judge a tool’s adaptivity, personalisation, or positive learning impact.”
Still, he sees momentum building for ‘effective EdTech’; Ei recently won a tender to implement PAL in 700 residential schools in Andhra Pradesh, and the Uttar Pradesh government released a tender for PAL implementation in 4 districts.
Balancing growth and profitability
Ei has consistently balanced the glamour of growth with the security of profitability. During the pandemic gold rush, this strategy stumped investors who wanted to capture markets first and monetize them later.
“That was the flavour of the season, and I felt pressure to follow suit. It wasn’t easy, waking up to Byju’s valuation jumping by another billion dollars or WhiteHat Jr. splurging on expensive TV ads,” Kothari confesses.
“We had a massively different experience and feared irrelevance - while others raised $100s of millions, we were recovering money from locked-down schools. It was definitely my lowest point, especially seeing team members leave for competitors offering many multiples their current salary.”
Still, hailing from a business family, with an MBA in hand and a background in consulting, he stood by the belief that good businesses earn more than they spend.
“Profitability provides freedom,” he maintains. “You’re not perpetually fundraising and don’t need to accept unfavourable terms. You can grow steadily, create value, and experiment without fear of failure.”
“There’s the famous rule of 40, right? Your growth rate and EBITDA should add up to 40%. Growing at 60% a year with a -20% EBITDA is as good as growing 20% with a +20% EBITDA. We just chose our way.”
This conviction paid off. As tides (and investor priorities) turned towards profitability and companies with high burns struggled, Ei stayed on course. The company’s board stood by Kothari, appreciating the frugality. The strategy stood it in good stead, Ei never having seen a down-round across its 25 years.
Preparing for the future
If lockdowns disrupted EdTech in 2020, today’s revolution is driven by AI - and Kothari’s excited.
“We can finally solve problems we’ve been dying to solve for 20 years!” he exclaims. “We’ve already integrated spoken language feedback, closing a crucial feedback loop. Earlier, you’d need an army of tutors working 1:1 - prohibitively expensive - but language processing models make it easy. Similarly with structured writing – beyond just testing grammar, it can help you write poetry, haikus or anything with detailed feedback.”
The real potential lies in personalising instruction at a previously unimaginable depth and scale. When each child is at a different level, why give them the same textbook or questions, he asks?
“We’re creating interactive teacher dashboards with generative AI,” Kothari expands. They can now ask simple questions — like which students are struggling in fractions — instead of digging through spreadsheets. “It’s unlocking new levels of personalisation.”
Given India’s linguistic diversity, generative AI can solve bottlenecks around translation and language comprehension, enabling vernacular learning at scale. “This will take time.” he warns, “Because we don’t have powerful foundational models in these languages yet.”
Still, his vision is clear. “In 2030, classrooms will be places for children to play, collaborate, and socialise,” he predicts. “But teachers shouldn’t be delivering lectures to 40 students simultaneously. Use EdTech to personalise instruction and let schools do what only they can - build values and foster collaboration.”
Systemically, he urges government officials to look beyond infrastructure and teacher training as keys to improved learning. What students need, he argues, is continuous, accelerated instruction — and the right tools can play an outsized role. “It’s like booking a train online,” he remarks. “You can stand in line at the station, but this is a dramatically better way.”
Taking an educated bet
Locked down and building up
“Building PhysicsWallah (PW) is the most phenomenal journey I’ve had,” says Abhishek Mishra, GSV Ventures’ first India-based partner. Previously, Mishra was Chief Strategy Officer at PW, one of India’s most valuable EdTech companies.
Before COVID, educators resisted digital learning. Instead of innovating on their offline models, they remained status-quoist.
“The pandemic forced them to pivot or perish,” he continues. “Unlike masking, digital and hybrid learning stuck, accelerating EdTech adoption by a decade.” After all, demand for learning held steady; students were still giving board exams and entrance tests. Technology adoption only helped more companies reach them.
Mishra believes PhysicsWallah began a revolution by breaking three myths: that free content would discourage paid adoption (instead, it built trust), that low-prices meant low quality (their students performed exceptionally well), and that ₹5,000/year pricing was unsustainable (low customer acquisition costs and efficient distribution made it viable).
“We weren’t affected by big EdTechs collapsing. Students kept faith because we supported them at crucial points in their learning journey,” Mishra highlights. This philosophy dated back to 2016, when PW’s CEO and Founder, Alakh Pandey, shared free YouTube content comparable to material priced at ₹60,000 - ₹1,00,000 — earning loyalty long before the company existed.
The journey from operator to investor
Switching from operator to investor came naturally. Mishra had previously pitched to GSV while at PhysicsWallah, so understood investor priorities, and spent his last two years at PW focussing on mergers and acquisitions.
“I was basically an investor within PhysicsWallah. I met over 100 founders and loved talking ideas with them,” he emphasises. “I knew my next role would be in investing.”
The new perspective offered keen insights. “The first thing I noticed was how differently investors think about valuation,” Mishra says. “For founders, the company is their baby — there’s always an emotional premium. But investors need discipline. Bull markets especially boost valuations beyond mathematical justification, which makes early-stage investments tricky. But we need to constantly price risk, balance our math with the founder’s belief, and answer to our LPs.”
More interesting, though, was realising that VCs weren’t just investing, they’re selling their capital. “From a purely monetary perspective, every dollar is green, what differentiates our money for a founder?”
GSV’s answer? Deep expertise.
“The firm focussed only on education for 15 years, while our Managing Partners – Deborah Quazzo and Michael Moe – brought 3 decades of experience,” he stresses. “We offer unique insights and, through ASU + GSV, open them up to an unmatched network. It’s why we’ve had the best seat at the best companies’ cap table in the last decade.”
Negotiating valuations
Mishra has seen negotiations over valuation play out both from the founder’s and investor’s side.
“At PhysicsWallah, we didn’t entertain anything below a billion-dollar pre-money valuation,” he says. “Our metrics were 5–10x stronger than incumbents already valued that high, and we had a fraction of their CAC. It was the tail-end of the bull market, and we were able to become the 101st EdTech unicorn.”
From the investor’s side, he spoke of a promising AI learning tool whose seed round GSV participated in. “The business grew, but had relatively low volumes in a competitive market,” he recalls. “We valued their next round at 2x, but the founder insisted on 4x. He was confident of the product-market-fit and firm on his stance. GSV agreed, betting on long-term upside. “Sometimes you pay more now, hoping it becomes a fund-defining investment later.”
Mishra admits that early-stage predictions are rarely accurate. “Michael Moe told me the most successful founders do things people can’t imagine,” he says. “You can’t judge them by past benchmarks. Their predictions will be wrong, but you’re looking for founders that positively surprise you. You see if they’re adaptable, open to input, and great with people, then invest for 20x returns.”
The post-pandemic market, though, is more demanding of founders. Earlier, a seed round required a good idea and a trustworthy founder. Now, investors want a minimum viable product, previous fundraising from founders’ own networks, existing customers, and maybe even $500K–$1M in revenue
“Founders are more pragmatic on pricing, and don’t demand valuations at 30-40x of revenue anymore,” he expands. “The best ones set a sensible floor, but focus on their idea – does it live and breathe, is it going to see the light of day as I imagine? Those are the ones I love.”
The pandemic post-mortem
While the pandemic accelerated EdTech, the hype inflated valuations beyond justification. Emerging giants couldn’t meet expectations, falling one-by-one.
“I think the tools had value,” Mishra reflects. “But issues arose beyond education: misaligned and overvalued acquisitions, poor corporate governance, aggressive sales. They were trying to convince parents through fear, pointing out deficiencies in children and pushing things at the wrong time for students - like getting them to code at age 5.”
The frenzy, of course, was fuelled partly by colossal VC investments. Everyone wanted in. At its peak, they valued Byju’s over $22 billion, almost 10x what PhysicsWallah, India’s most valuable EdTech today, was priced at in 2024.
“I can’t justify those numbers,” he admits. “You can use discounted cash flows, trading comps, potentiality analysis, time analysis, their steady state margins – do all the math and still won’t add up. Returns at those valuations became impossible and things had to course correct. You’d have down rounds.”
“I understand founders wanting high valuation – they get capital without diluting stake. They’ll always have enough equity to fall back on and raise money if needed.”
These sky-high valuations can backfire, he notes. “Even if your team works overtime to quadruple business, their ESOPS will be worth the same. That’s demotivating.”
“Investors were alarmed when things began falling, definitely,” he continues. “They tried to do their due diligence and remain high-touch – Deborah’s in India every quarter meeting all the portfolio companies. But you can’t blame them alone for corporate governance failures. No matter how much they push for transparency, finally it’s founders who have full control and clarity over the minute day-to-day decision making.”
“Other actors are also responsible for holding founders accountable towards best corporate governance standards - these companies had the most accomplished boards and best statutory auditors. But, ultimately, governance is driven from the top. It’s a value system to be established, and who better to establish a moral compass than the founders themselves - who are the soul of the company."
Focussing on India
Despite past turbulence, GSV remains bullish on India. Mishra’s appointment as their first India-based partner and hosting an India ASU+GSV summit signal that.
“Because education remains the primary driver of socio-economic mobility, demand for and access to it only grows,” he explains. “Students giving competitive exams is up 10% year-on-year. Think about it – till age 30, the largest expense in most Indians’ lives is education.”
Despite Indian laws limiting investment in formal K-12 schooling and higher-ed, there’s strong potential in test prep, tuition, skill development, and more. Mishra’s particularly bullish on early childhood ventures. With growing double-income households, parents have more disposable income but also need greater support for their children’s learning.
Supporting this huge market, Mishra’s actually optimistic about policy changes in this vein.
“The National Digital University project has taken off, ONDC-like platforms are emerging for education, Gujarat’s GIFT city is inviting foreign universities to establish satellite campuses,” he points out. “These are positive indicators of huge market opportunities.”
His ultimate ambition, though, is big. “India hasn’t created a truly global EdTech platform right now - I want to see that, one that serves the world.”
Pathways
This month’s edition of pathways goes further into the makings of innovation and excellence in education.
First, to remind yourself the true purpose of education, watch Sir Ken Robinson’s TED Talk on schooling and creativity. As relevant as when published in 2008, it’s one of the most profoundly moving (and funny) expositions on the learning journeys we’re put through, and what they should really be like.
Second, we recommend you listen to Steve Levitt’s interview of Khan Academy founder, Sal Khan. Khan Academy’s famous for enabling high-quality learning online much before it was popular. Now, it’s combining the best of digital and physical learning through the Khan Lab School, pushing the envelope on tech-based pedagogical innovation.
Third, to understand what makes for educational success at a systemic level, we suggest you read Cleverlands by Lucy Crehan. A teacher by training, Crehan spent years embedded within education systems across Finland, Canada, Japan, China and Singapore - global leaders in learning - to understand what enables effective education for an entire populace.
That’s it for this month from us. If you’re new and want the next issue of Odyssey in your inbox, subscribe above. Share this with people you know who are curious about everything at the intersection of tech, VC, and innovation in India.