(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

MUMBAI - India’s online educators are in cramming mode. Foreign investors are piling in, fuelling valuations and acquisitions. There are solid prospects at home and overseas, and with less threat of a Beijing-style crackdown.

Take upGrad. Ronnie Screwvala’s venture offers MBAs and doctorates online through institutions including Deakin Business School. Students pay as much as $11,000, one-quarter the offline cost. The company said last week it had raised money from Singapore’s Temasek and others at a $1.2 billion valuation. Days earlier it bought a corporate training outfit. UpGrad is also going abroad with an eye on the high-margin, supplementary education market. Eruditus, which is charting a similar path, just raised $650 million from SoftBank’s Vision Fund 2 and others valuing it at $3.2 billion.

Selling software that supports so-called after-school learning has carried BlackRock-backed Byju’s to a $16.5 billion valuation, almost treble its worth two years ago. Founder Byju Raveendran has already spent some $2 billion on deals this year. The acquisition of Great Learning, a professional and higher-education specialist, will help it reach higher-fee enrollees. Byju’s also connects Indian graduates to students around the world who want inexpensive tuition and is starting a similar service in Latin America. It reports 100 million registered users and 6.5 million annual paid subscriptions on its core app.

The domestic opportunity is huge: More than two-thirds of Indian parents, nearly as many as in China, consider education the best investment they can make, according to a 2017 Harvard Business School study. Companies are also stretching to consolidate a fragmented market and to capitalise on new trends. These include greater acceptance of virtual learning. Familiarity with English also helps with international ambitions. Chinese peers like TAL Education mostly just wanted capital from abroad.

It’s a fine balance. Dizzyingly fast growth trips up many startups. And although Byju’s is profitable, competition is fierce as business models converge. Beyond reining in aggressive marketing practices, however, New Delhi is unlikely to clamp down in a significant way. Chinese policymakers want to support the birth rate by reducing financial burdens for parents, while India has a young population where small families are regarded as patriotic. That combination gives the industry some comparatively high marks.

 

CONTEXT NEWS

- India’s upGrad, an online higher education company, said on Aug. 9 that it had raised $185 million at a $1.2 billion valuation. The company’s investors include Temasek and World Bank affiliate International Finance Corporation.

- Eruditus said on Aug. 12 it had raised $650 million from a group of investors led by SoftBank Group’s Vision Fund 2 and Accel Partners, in a deal that values the Indian education technology startup at $3.2 billion.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

(Editing by Jeffrey Goldfarb and Sharon Lam) ((For previous columns by the author, Reuters customers can click on GALANI/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe | una.galani@thomsonreuters.com; Reuters Messaging: una.galani.thomsonreuters.com@reuters.net))