As 2023 draws to a close, we take a look at the major developments in the Indian edtech sector. 

This year, headlines were dominated by the struggles of Byju's, the most valued edtech company, whose woes cast a long shadow on the entire ecosystem.

Fueled by a global funding winter and investor skepticism towards edtech, the sector witnessed record low investments. This stark reality forced a necessary course correction, with founders hunkering down and strategising to overcome the turbulent waters.

The latest to join the fray is Exampur, the company that was almost acquired by UpGrad last year. 

• The test prep startup, which scaled down massively, conducted layoffs, and is still to pay dues to current and former staff after UpGrad shelved its buyout plans, serves as a microcosm of the troubles that loomed over the Indian edtech industry in 2023

We've also curated a selection of our must-read stories from this year, showcasing how edtech startups grappled with the funding crunch and shifting demand for online learning. 

Was this newsletter forwarded to you? You can sign up for Tech3 here

• As more edtech startups reported their FY22 results earlier this year, they provided strong evidence of the high levels of spending on growth during the boom period of 2021 and early 2022. The five edtech unicorns – Unacademy, PhysicsWallah, Vedantu, Eruditus, and upGrad – collectively spent over Rs 2,250 crore on advertising, marketing, and promotions. To be sure, if we had waited for the sixth unicorn's financial report, this analysis would have been as mythical as... well, a unicorn. Byju's, as of today, is still MIA with its consolidated FY22 numbers. More on that later.
  
  
• Edtech soonicorns, with valuations between $150 million and less than a billion, such as Leap Scholar, Classplus, and Teachmint, have recently experienced a disconnect with their valuations. They raised funds at unprecedented revenue multiples ranging from 100 to almost 5,000 as of FY22, even as the demand for the purely online model plummeted.
  
  
• Meanwhile, as the mounting competition within the test prep space continued to ignite wars among players, it also loomed over Kota, the coaching hub of India. This dusty town in Rajasthan, where career dreams are made, tragically remains a place where they are often extinguished. In our story, we delve into the recurring tragedy of student deaths in Kota.
  
  
• As 2023 progressed, edtech giant Byju's found itself back in the headlines, embroiled in a series of issues with lenders, employees, vendors, and government agencies like the Enforcement Directorate and the Board of Control for Cricket in India. This turbulence, coupled with existing woes within the sector, sparked widespread investor skepticism towards Indian edtech. The fallout even prompted Unacademy's backer, General Atlantic, to opt to completely avoid further investments in the space. More on that here
  
  
• Faced with funding uncertainty, edtech startups grappled with cost-cutting measures throughout the year. A game-changer came in the form of generative AI in education, which, as many later discovered, proved to be a powerful tool for reducing costs and boosting productivity. Here's how edtech entrepreneurs leveraged generative AI to overcome their struggles.
  
  
• Some even contemplated venturing into more profitable models. In 2022, K-12 and test prep companies, facing the post-pandemic shift back to offline learning, sought a lifeline by opening physical centres. But 2023 saw a surprising twist: even higher education and upskilling startups, initially thought to be immune to the funding winter, embraced the offline model. Companies like Scaler, PhysicsWallah, and Newton School, among others, launched "new-age" colleges, in a bid to take on established tech institutions.
  
  
• Byju’s ended the year on a dramatic note. Following a lengthy and stormy annual general meeting, the company's shareholders gave their approval for Byju’s FY22 financials and other resolutions. However, the meeting also brought to light serious concerns about Byju’s chances of survival in the next 12 months. More on that here

• Amid ongoing poaching in the Indian IT industry this year, Infosys and Wipro experienced the highest number of top-level exits. Turns out Infosys has now issued a written communication as a deterrent to Cognizant, following the exit of some of its senior leaders to join the latter. Additionally, Wipro has taken more serious legal action, filing lawsuits against two former senior executives, CFO Jatin Dalal and SVP Mohd Haque, who recently joined Cognizant.
  
  
• IPO-bound FirstCry saw its revenue jump to Rs 5,633 crore in FY23, a 135% increase from the previous year. During the same period, its loss widened 515% to Rs 486 crore. We previously reported on FirstCry's plans to go public, aiming to raise around $500 million.
  
  
• Fireside Ventures, an early backer of Mamaearth, made a 4,500% return on its investment after the beauty and personal care company listed on the National Stock Exchange. We caught up with Dipanjan Basu, co-founder and partner, to understand Fireside’s recipe for IPO-ready companies. The key steps include appointing a head of finance from the early days, implementing an internal programme dedicated to scaling businesses, and more.  
  
  
• With the imminent release of the draft rules for the Digital Personal Data Protection (DPDP) Act becoming more realistic, we have learned that a version of these rules is currently being circulated internally within the industry. A copy accessed by us shows that the government may make it mandatory for data fiduciaries, whether government or private, to immediately report any data breaches to the Data Protection Board. Similarly, the draft rules may also shift the responsibility of ensuring proper parental consent for processing children’s data onto platforms.

Note: By subscribing to Tech3 you have already made the right choice. Top it up with a premium offering, the Moneycontrol Pro Panorama, a newsletter that gives you a sharp take on macros, markets, business and finance. Sign up for Pro from this link to get this newsletter in your inbox and also a host of content enjoyed by 500,000+ subscribers.