Indian edtech Vedanta has acquired a majority stake in education chain Deksha for $40 million, its latest attempt to capitalize on opportunities in the offline market of local online learning platforms.
Bengaluru-headquartered Vedantu, which became a unicorn last year, said it would integrate its technology with Deksha’s offline centers as part of a strategic partnership to create a “flexible hybrid model”. Deeksha is a 22-year-old institution and is operating 39 physical centers in three states of India.
Vedantu started experimenting with offline experiences earlier this year and found the right partner in Deeksha to create deep engagement in small towns and cities in India. In an interview with TechCrunch, Vamsi Krishna, founder and CEO of Vedantu, said that they had been following Diksha for 10 years and when they started exploring synergies together, it became clear that the two would benefit greatly from the partnership.
Deksha’s current topline is $10 million to $12 million and it is operating at a 21% EBIDTA margin, said a person familiar with the matter. Krishna declined to comment on Deksha’s finances.
Krishna, himself a teacher, took a slightly different approach to finding opportunities to buy. The edtech market in India has witnessed over a dozen consolidations in the past two years, but Vedanta has largely avoided any involvement in that game. “We’re still open to more starters, but I don’t have a specific benchmark to hit. Acquiring companies is not a strategy for Vedantu,” he said.
“When we say we’re using a hybrid strategy, we don’t mean pure offline centers. In fact, we have no intention of opening a pure offline hub. We always believe in providing access to quality teachers, especially in tier 3 and 4 cities. Our vision is for students to come to the center, but teachers are still teaching through streaming and other technologies.
India’s edtech giants have accelerated their growth during the pandemic — and raised huge amounts of capital. But as schools reopen, companies are struggling to maintain the same growth.
India is one of the world’s largest education markets with over 300 million students attending school and preparing for competitive college exams. Only a fraction of this base is currently using any online learning service.
Offline coaching centers, on the other hand, continue to grow and become very popular among students. In the last couple of years, top edtech giants Baiju, Vedatu and Unadami, some of them trying to dislodge the offline players by offering affordable and high-quality education, have renewed their efforts to tap the offline market directly.
Baiju acquired another physical online institute Aktion last year for nearly $1 billion. Unacademy launched offline experience stores earlier this year. “Offline learning is not going away anytime soon. In fact, online meets offline perfectly, and as a package, the omnichannel model is leading for a long time and is here to stay,” GV Ravishankar, partner at Sequoia India, said at an event earlier this year.
“Through this partnership, we will leverage Vedantu’s LIVE Class platform for our students and provide a hybrid solution that maximizes learning outcomes through personalized learning algorithms. Vedantu’s hybrid education model enables us to provide the same ‘Deeksha Experience’ to millions of students in small towns and cities, said Deeksha Founder Dr. Sridhar in a statement.
