Edtech soonicorn Brightchamps gives India business a makeover; acquires 90% of learners via schools

The company has had more success with this model in South East Asian countries such as Indonesia and Thailand, from where it derives the majority of its revenue. Bhushan believes this is because developing countries are more committed to education, which they view as a ladder to success, and hence, are willing to pay more.

But more importantly, this is due to the high cost of acquisition in the Indian market compared to other geographies owing to the cut-throat competition in the edtech sector.

As Brightchamps began scaling its India business in 2023, it shifted focus to a model that was more sustainable, tapping schools to reach learners. As a means to this end, it acquired Metamorphosis Edu, a platform offering entrepreneurship courses to young students, in April.

About eight months on, the company now earns 90 percent of its business in India through Metamorphosis, which has now been renamed Brightchamps B2B (business-to-business). The incumbent B2C model, meanwhile, only makes up about 10 percent of its India revenue.

“We thought that there's no point just burning money and continuing operations, creating an unhealthy business. So, we took this approach,” Bhushan explained.

Today Brightchamps, in its new India avatar, offers certificate courses on coding, financial literacy, entrepreneurship and robotics accredited from institutes like ISB, IITs and Harvard. But now it reaches students, especially those in the grade 3 to grade 8 category, through schools. It has also begun offering Generative AI courses recently.

In this model, the school pays Brightchamps for the curriculum it picks for the students. The school then recovers this amount from students as an added charge on their fees.

BrightChamps allows schools to choose any or all of the four-five courses it offers to customise its own curriculum. It recommends a minimum of 15 classes per course and charges the school an average of Rs 150 per class, per child.

New India playbook

As Metamorphoses was based in Hyderabad, the company initially targeted schools within the subsidiary’s customer base and others in southern India; it has now partnered with tier one schools across the country, said Bhushan.

Since April, Brightchamps has acquired close to 35,000 students through the new B2B model. “We are targeting to acquire close to 1.5 lakh students in a year from now,” Bhushan said.

Mujtaba Wani, principal investor at GSV Ventures, one of the backers of Brightchamps, believes that while both B2B and B2C are viable business models, what sets each model apart is its scalability and unit economics.

“In India, some B2C edtech companies with differentiated customer acquisition models have been able to scale up with amazing unit economics… Brightchamps' consumer strategy has always been strong in Southeast Asia and MENA,” said Wani. “But Brightchamps entered the India market through an acquisition of Metamorphosis, which was a B2B business. It makes sense to double down on Metamorphsis's DNA.”

To be sure, the company had been running B2C operations in India since its inception, albeit on a smaller scale as compared to its other geographies.

In FY22, Brightchamps reported operating revenue of Rs 22.5 crore and a loss of Rs 98.6 crore. It spent heavily on advertising and marketing during the year to enhance its brand appeal, Moneycontrol reported.

However, the company claims that while all the expenses are channelled through its India business, it collects revenues from five different entities across the globe, including US, Vietnam, Bangladesh, Indonesia, and Singapore. So, the company’s global revenue is much higher than what the India filings show.

Brightchamps has not reported its financials for FY23 and plans to do so in the next two to three months, Bhushan added. More importantly, in the current fiscal year (FY24), the CEO claims that the company has managed to reduce its burn with the new model and does need to spend on marketing anymore.

B2B only in India

Brightchamps, which was founded in 2020 by Bhushan, has operations in over 30 countries including India, Vietnam, the US, Canada, the UAE, Saudi Arabia, Indonesia, Malaysia, Thailand, and Nigeria.

Importantly, the startup has continued with its B2C model in other geographies, changing tack only in India. Bhushan said that the Indian market has a huge volume of students, but they are price sensitive, which sees the cost of acquisition shoot up in a direct approach.

“...You need to have an approach through which you can acquire the students in bulk fashion, which is through a school or through some other educational institution where hundreds of students get acquired in one place, and you provide them a very affordable pricing so then the CAC (customer acquisition cost) and the delivery prices become sensible,” he added.

Bhushan was quick to add that while it is focusing on B2B for India currently, it might reattempt to stregthen the other vertical in the future.

GSV’s Wani added that while CAC can be a challenge in any market, the issue is particularly acute in India because digital marketing-led CACs increase as more companies try to bid for advertising.

“...As more startups raised money and came into the space, CACs spiralled higher and higher. India is of course an extremely hot EdTech market from a consumer perspective, with many companies vying for consumer attention, which is why competition and CACs can be particularly high,” he added.

Brightchamps has raised a little over $63 million to date from backers such as Premji Invest (the investment office of Wipro founder Azim Premji), edtech-focused investor GSV Ventures, and Singapore-based venture fund Beenext, among others.

Edtech in India

This comes at a time when many B2C edtech companies, especially in the K-12 vertical, are struggling to recover from the post-pandemic demand slowdown in business, with some even shutting shop. While companies such as Frontrow, Lido and Udayy, among others, have shut down, many, including edtech unicorns such as Byju’s, Unacademy and Vedantu, had to cut corners and change their strategies to survive.

Owing to this, funding inflows to India’s edtech sector dropped by more than 80 percent to $400 million in the first eight months of 2023, from $2.4 billion in 2022, Moneycontrol had reported earlier, citing Tracxn data. To be sure, the 2023 investment figures are also lower than the pre-pandemic 2019 level, when it was at about $600 million.

While K-12 edtech was the worst affected, upskilling and higher edtech continued attracting investors. In the first eight months of 2023, investments into higher edtech are down just 13 percent compared to the whole of last year.

This year many companies also went offline or shifted to a hybrid model in a bid to retain customers returning to physical coaching classes post the pandemic phase of Covid. In fact, Bhushan’s Brightchamps is also bullish on developing hybrid centres in one of its most promising geographies, Vietnam. The company expects Vietnam to also become the highest revenue generating country by March of 2024. Brightchamps is expanding its offline presence in the country and has opened about four such centres till now.

As of the latest financial year end, Indonesia, the UAE, the US, and Thailand are major revenue-generators for Brightchamps.

“We have a very global footprint and offline is local, so it’s not easy for us to do it everywhere at once, considering it requires high capex. So, we are going country by country. We aim to launch 25-30 centres in Vietnam and then move on to other countries,” Bhushan added.