Layoffs have been the talk of the startup town. Since the beginning of 2022, around 12 prominent Indian startups have laid off nearly 6,000 people so far. Of these, surprisingly, three are unicorns. And not so surprisingly, four are from the edtech sector. The names include Unacademy, Lido and Vedantu. The number of employees sacked also seems to be more in the edtech sector.
Why are edtech companies taking the layoff route?
Before we get into it, let us rewind a bit and look at how the sector was up until March 2020 when the pandemic hit us and schools and educational institutions were forced to shut down.
The edtech was surely not a favorite sector of VCs. In fact, BYJU’S was the only unicorn in the sector and even BYJU’S had to spend around ten years to reach the valuation. Test preparation, online certification, skill development and STEAM for K12 were the only sub-sectors that looked a little promising. However, by April 2020, parents were forced to move their children online and K12 started flourishing. The pandemic gave the ‘questionable’ revenue model a different dimension. From extracurriculars to tutorials, everything moved online. The golden era of edtech had begun and the companies started hiring left, right and center to cater to the growing demand.
Impact of schools reopening
Today, as schools reopen, the situation is back to pre-pandemic days. “People have started to adopt to offline mode for education and hence there is stress on sales and edtech companies will see a drop in sales volume with offline getting started,” says Anil Joshi, managing partner, Unicorn India Ventures.
This story is from the Startups June 2022 edition of Entrepreneur magazine.
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This story is from the Startups June 2022 edition of Entrepreneur magazine.
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