India has the largest user-base of consumer internet. This has attracted significant interest from the biggest internet companies from the USA including Google, Facebook, Amazon, and Uber. Further, compared to other Asian countries, it is relatively easy for Western companies to enter India due to the number of English-speakers (second largest globally). The giants obviously do not want to miss out on tapping this opportunity.

At the same time, some of the above-mentioned large internet companies have also tried entering China, but the ‘Great Firewall’ has fairly kept them out and also guarded the local companies from outside competition. Further, the significant cultural and language difference has provided an advantage to the Chinese players in the local market, coupled with huge domestic and international investment, which the Indian internet ecosystem lacked in its early days.

Size of Tech Companies in US, China and India

Given it has a student population of 300M+, India is also one of the biggest potential markets for Edtech globally. This has attracted interest from top global edtech companies like Coursera, Udemy, Chegg, etc. from early on (even before the Covid-19 tailwinds). For companies in segments like MOOC, Upskilling, etc. - which can just sell their existing courses without localising, India is definitely an additional market to explore and target the huge English-speaking population.

Ad Campaigns in India by Chegg and Coursera

However, today’s newsletter explores international companies competing in local education segments in which global content offers no competitive advantage or is irrelevant (such as after-school tutoring, test prep, etc.).

Will I conclude on who among them is positioned to win? The jury is still out.

Snapsolve (Bytedance）

Mobile only product for OCR-based doubt-solving, mainly focused on Test Prep. Users can take pictures of the question/ doubt and the app helps find a solution in a text/ video format.

Parent Company: Bytedance
Valuation: $180B
HQ: Beijing, China

Competitive Landscape

Differentiation: The app seems to be ‘inspired’ from Doubtnut (Tencent-backed, Indian doubt-solving OCR app), except one unique feature of a free, live doubt solution by a teacher. 

Real-Time Live Doubt Solving

Ad Campaigns:

Ad Campaign on Facebook

Bytedance X Education:

Bytedance is one of the fastest growing internet companies in the world. Headquartered in Beijing,  it has been in the news for its viral app ‘Tiktok’ (抖音 in China) which was recently banned in India. 

The company has been very keen on the education market and has been investing aggressively in education companies in China since 2016 through its corporate venture arm , as well as launching new businesses. It recently launched a standalone brand called Dali to double down in the Chinese market. With 600M DAUs in China, it is well positioned to gain distribution for its education products in the country. I think they had a similar rationale behind launching Snapsolve in India, but unfortunately could not take-off due to the ban on Tiktok by the Indian government. 

The content for the target market is very localised, so they rely extensively on the local leadership without much benefits coming from the Beijing HQ. 

On the contrary, Bytedance has no urge to monetise, given its massive funding (it is expected to do $27B in revenue this year). Therefore, it can focus on growing the business whereas other competitors have the challenge to develop a monetisation strategy to grow sustainably. This can lead to unhealthy competition and the CAC going up for the local players.

Oda Class (Yuanfudao)

It is a one-to-many live class platform, focussed on (i) classes 6 to 12 for Maths and Science, following the NCERT/ CBSE structure, and (ii) JEE preparation courses for classes 11 and 12. 

Indian Entity: Pigeon Education Tech. Pvt. Ltd.
Majority Investor: Yuanfudao (Biggest Edtech Startup Globally)
Valuation of Yuanfudao: $15B
HQ of Yuanfudao: Beijing, China

Competitive Landscape

Pricing: A usual course which covers the entire syllabus for class 6 (with 100 live sessions) costs around $100, which is cheaper compared to Vedantu and BYJU’s. However, the courses on Oda are restricted to Maths and Science for now. 

Differentiation: Oda Class is focused on one-to-many live classes in larger formats with a dual teacher model. It has also onboarded star teachers from BYJU’s, Vedantu, etc. However, other platforms listed above have diversified offerings, like Vedantu offers both smaller classrooms as well as larger classrooms. The company is seemingly not very different from other platforms, except for its core focus and cheaper pricing. 

Ad Campaigns:

Ad Campaign on Facebook

Yuanfudao X Education

Yuanfudao is a $15B edtech startup from China with its primary offering being doubt-solving and live classes. 

With deep knowledge and understanding of the Chinese edtech landscape, it is well positioned to bring the learnings to India and localise the platform with help of local leadership. In a short period of time it has done a pretty good job of building a team of star teachers and curriculum along with an able leadership. 

A recent fundraise of $2.2B round will allow Oda Class to be aggressive in capturing a higher market share and co-exist with BYJU’s and Vedantu (both similarly well-funded with strong tailwind in their favor). It also makes it tough for younger companies to compete with these giants, and I expect strong consolidation.

Amazon Academy (Amazon )

Amazon launched the ‘JEE Ready’ app in mid-2019 for JEE Mains and Advanced Preparation Test Series. The name was recently changed to ‘Amazon Academy’. It still seems to be in beta.

Parent Company: Amazon
Valuation: $1.8T
HQ: Seattle, USA

Competitive Landscape

Pricing: Free-to-use currently (whereas other companies follow a freemium model). 

Differentiation: So far, it is not different from other products out in the market, and is entirely focussed on a single Engineering entrance exam. In fact, other products are not just focussed on JEE, but other exams such as NEET, State Government Exams, Central Government Exams, etc. 
Going forward, I expect Amazon to develop content in other verticals and add more features like live courses. For now, the company seems to be testing waters.

Ad Campaigns:

Ad Campaign on Facebook

Amazon X Education

Amazon is the largest (internet) company with market capitalisation of over $1.8T. Amazon has launched ‘AWS Educate’, which is a global initiative to provide students comprehensive skills required to operate on the cloud, especially around the AWS Ecosystem. It also runs an accelerator for Edtech companies, called EdStart. If you are looking to start an Edtech company, could be interesting to get access to AWS credits! Amazon has also invested in edtech companies like Unruly and Beanstack amongst others. 
However, education is not Amazon’s core focus, and it is for this reason that I am sceptical if it can create a large test-prep business when compared to local businesses. Although it will likely make the overall ecosystem more competitive and increase acquisition costs.

Teachee (Joyy)

It is a SAAS platform for teachers to launch and sell their online courses, using their phone or desktop. Shopify for teachers.

Parent Company: YY (Joyy)
Valuation: $7.6B
HQ: Guangzhou, China

Screengrab of the website

It competes with the likes of Classplus, Teachmint, Winuall, etc. 

I have not done a detailed mapping since this space is relatively new (Covid-born) and there is very less information publicly available about the company. Feeling a bit unethical to schedule a demo with Teachee team for my newsletter.

Potential Differentiation can be around pricing and building a marketplace of teachers, who can compete with the likes of BYJU’s, Vedantu, etc. The SAAS platform has been commoditized with low barrier to entry with several players coming up, the MOATS can be built with help of attracting demand for these teachers.

Ad Campaigns: 

Promotional Material

YY X Education

YY is a live-streaming giant based in China, with several portfolio apps like YY Live, Bigo, Likee, Huya. It launched 100.com in 2014, which is an ed-tech platform that started with online classes for English language exams like TOEFL and IELTS and operates like a 1 on 1 live tutoring platform now. Bigo Live and Likee got banned in India earlier this year.

Overall implications for local Indian startups：

• Geopolitical Risk: For Chinese internet companies, entry in the Indian market right now carries a geo-political risk, which is why they are silently growing and trying to dissociate with Beijing. For example, Bytedance operates Snapsolve under a Singapore-based entity, WhizSolve Pte. Ltd, YY operates Teachee under a Singapore--based entity (Vlight Pte. Ltd.) as well. Given the policy climate, it is unlikely for these companies to grow very aggressively in the next few months.

• Localisation: Content localisation is necessary and Indian counterparts do have an edge over their international counterparts. Bigger players like BYJU’s, Vedantu, and Unacademy have the scale and funds to compete effectively with international incumbents. However, the same might not be true for the younger startups, since the acquisition costs are likely to increase for them and it might be difficult to sustain. 

• Monetisation: The international players come with full-funded parent companies, which reduces their need to monetise aggressively. For younger startups, this results in a challenge to compete on price. 

• Based on how the above factors play out, we are likely to see-
  M&A: in segments which are not deep enough
  Shut Downs: in segments which are hyper competitive and low barrier to entry
  Co-existence: in segments which are very big

For young edtech founders, I think it is important to play up to their competitive advantage, instead of being small fishes in a big pond. It is natural for international players to be attracted by the bigger segments, leaving unserved segments (maybe because they seem small) relatively less crowded. For example, 1 on 1 premium live courses is still an untouched territory.

Operating in segments with a relatively higher barrier to entry is imperative, whereas having a large content repository is not a big enough MOAT anymore.

Lastly, do not do edtech just because it is hot. The Covid 19-induced impetus is unlikely to permanently make education  a completely tech-driven play in the longer term, since students are frustrated by doing long format classes online. Decluttering Covid noise and building a business proposition for the long haul will prove to be the key for a winning business. 

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Rahul is an early stage investor with focus on Emerging Markets. He has spent his career between China, SEA and India in consumer internet industry. He is actively writing his thoughts in his blog Oldrope.