Startup Street: Investors Finally Warm Up To Indian Education Startups

This week on Startup Street, a new report shows how the funding floodgates opened for India’s education startups in 2018. Artificial intelligence gets ready to detect crime before it happens—Hollywood style. Ola seeks fresh funds from an automaker. And India gets its first unicorn of the year. Here’s what went on:

When Edtech Got Flushed With Funds

Deal activity and funding in India’s education technology startups hit an all-time high in 2018 as investors finally started recognising the potential of the sector in a country where a third of the population is below 20 years of age.

The edtech sector, as it is generally called, attracted private equity and venture capital investments worth $742 million last year, a year-on-year rise of 733 percent, according to a new report by EY India. That’s also more than double of the combined funding raised in the last five years. Even merger and acquisition deal value in the sector rose nearly 10-fold to $200 million.

The investor interest has been driven not just by startups offering school education, or the K-12 segment— for kindergarten to 12th grade—but also by those which offer open online courses, reskilling and upskilling programmes. “There is a burgeoning digital skill divide in our country and edtech companies are starting to step in to reduce the gap,” EY said.

India is also home to one of the largest school-going populations and parents are willing to invest more in their children’s educational requirements. “Traditional educational institutions are unable to service all the needs of students, thus providing edtech companies a vast marketplace to tap into.”

The startups making a real difference are those that are disrupting education using artificial intelligence, virtual reality and analytics to offer better content that serves as a value addition for a student, and not as a means to replace classroom coaching, EY said. “The biggest advantage of this space is that it moves away from the one-size-fits-all methods of teaching into a more adaptive learning and personalisation and most importantly, the convenience of whenever, wherever and however the user would like to learn. This has been one of the key factors in uptake of this technology.”

The sector is growing “rapidly” and is set to become a $2-billion market in the next three years, EY said. The report said edtech has also had an impact on offline players who are working on adding online content as part of their curriculum and hence becoming omni-channel. In the coming years, the report said, startups which offer more immersive and engaging educational content will see an uptick. Local language content curation will also become key to broadening their customer bases, EY said.

“While there are significant opportunities, companies will continue to focus on bringing down their cost of acquisitions, improving engagement therefore retention and most significantly quality of content and delivery with growing scale.”

EY’s full report can be seen here.

Remember Minority Report? Pre-Crime Is Here

Popular science fiction writer Phillip K. Dick thought of it. Steven Spielberg made a movie on it. Now a Japanese startup is bringing pre-crime from fiction to life.

Japan’s Vaak has developed artificial intelligence software that can detect a shoplifter before they even steal. Their software scans footage from security cameras and looks for fidgeting, restlessness and suspicious body language in potential shoplifters.

The goal is prevention. If the AI detects any such behaviour, the target can be approached and asked they need help and the theft can very well be avoided that way.

Last year, Vaak helped nab a shoplifter at a store in Yokohoma while testing its software. “I thought then, ‘Ah, at last!’” Vaak founder Ryo Tanaka, told Bloomberg. “We took an important step closer to a society where crime can be prevented with AI.”

Shoplifting cost approximately $34 billion of losses in 2017, according to a report by Tyco Retail Solutions cited by Bloomberg. That makes it a huge opportunity for Vaak to help retailers cap that leakage. Gartner Inc. predicts retailers will invest $200 billion in new technology this year.

The startup is testing their technology in over a few dozen store in Tokyo. They've already raised nearly half a million dollars from SoftBank’s AI fund and is now seeking to raise around 1 billion yen, according to Bloomberg.

Ola Eyes Hyundai Funding

Homegrown ride-hailing startup Ola Cabs is in talks with Hyundai Motor Company to raise about $300 million, people familiar with the deal told the newswire PTI.

The discussions are at an advanced stage and the deal is likely to be closed in the next few weeks, PTI reported. If the deal goes through, it would be Hyundai’s second investment in an Indian startup. Earlier it had pumped Rs 100 crore in car rental startup Revv.

A Hyundai Motors India spokesperson told PTI that the company is “open to cooperation with various potential partners but it is our policy not to comment on market speculation and rumours”. Ola didn't respond.