Indian edtech Vedantu has acquired a majority stake in education chain Deeksha for $40 million, the latest in the growing efforts of local online learning platforms to tap opportunities in the offline market.
Bengaluru-based Vedantu, which turned unicorn last year, said it will integrate its technology into Deeksha’s offline centers as part of its strategic partnership to create a “scalable hybrid model”. Deekshais a 22-year institution that operates 39 physical centers in three Indian states and coaches 11th and 12th grade students to work for competitive exams.
Vedantu started experimenting with offline experience earlier this year and said in Deeksha that it found the right partner to penetrate deeper into smaller Indian towns and villages. In an interview with londonbusinessblog.com, Vedantu co-founder and chief executive Vamsi Krishna said that he has been following Deeksha for 10 years and as they started exploring synergies together, it became clear that the two will benefit greatly from the partnership.
Deeksha’s current sales are between $10 million and $12 million and it operates at a 21% EBIDTA margin, according to a person familiar with the matter. Krishna declined to comment on Deeksha’s finances.
Krishna, who is a teacher himself, has taken a slightly different approach to acquisition opportunities. India’s edtech market has witnessed more than a dozen consolidation in the past two years, but Vedantu has largely avoided any entry into that game. “We are still open to acquiring more startups, but I don’t have a set benchmark to achieve. Acquiring companies is not a strategy for Vedantu,” he said.
“When we say we have a hybrid strategy, we don’t mean pure offline centers. We have no intention of ever opening a purely offline center. We have always believed in creating access to quality educators, especially in tier 3 and tier 4 cities. Our vision is that students come to the center, but teachers still teach via streaming and other technologies.
Indian edtech giants accelerated their growth during the pandemic – raising record amounts. But with schools reopening, businesses are finding it increasingly difficult to sustain the same growth.
India is one of the world’s largest education markets with more than 300 million high school and college students preparing for competitive college exams. Only part of this base currently uses an online education service.
Offline coaching centers, on the other hand, are growing and remain much more popular among students. Over the past two years, top edtech giants, including Byju’s, Vedantu, and Unacademy, some of which sought to supplant offline players by offering affordable, higher-quality education, have renewed their efforts to more directly tap into the offline market.
Byju’s last year acquired Aakash, another physical online institution, for nearly $1 billion. Unacademy launched offline experience stores earlier this year. “Offline learning is not going to disappear anytime soon. Online actually complements offline very well, and together as a package, the omnichannel model will steer and stay here for a long period of time,” said GV Ravishankar, a partner at Sequoia India, 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 learning model also allows us to provide the same ‘Deeksha Experience’ to millions of students in smaller cities and towns at an affordable price,” said Dr. Sridhar, co-founder of Deeksha, in a statement.