04. Edtech: Market Research

Let's start with mapping the education industry landscape. It has been my personal favorite because of my passion for teaching and a dream of making quality education accessible to people. Blume's 2020¹, 2022², and 2024³ edtech reports were heavily referred in making the following analysis.

01. Education Industry Landscape

b We can consider the following axes:

1. Age group served (Who?): Pre-school (< 5 years), K12 (5-18 years), Test Prep 1 (JEE, NEET, CET) (15-18 years), UG and PG (17-22 years), Test Prep 2 (CAT, UPSC, PCS, Bank, Job Interviews) (22-25 years), Upskilling (25-35 years) (6 possibilities).
2. Distribution model (How?): B2B, B2B2C, B2C, Marketplace (4 possibilities).
3. Outcome type (What?): Learning, Career, Operational, Discovery (4 possibilities).

This gives us 6 x 4 x 4 = 96 possible combinations! In reality, the valid combinations are far less. For example, creating something for career outcomes for pre-school and K12 markets is absurd.

The Valid Combination Set

1. Pre-school

2. K12

3. Test Prep 1

In this phase, the competitive exams are for getting a good university. These are not career-oriented exams.

Any platform created for UG competitive exams, can also deliver PG competitive exams.

4. UG & PG

5. Test Prep 2

These competitive exams lead you to job, career or some profession.

6. Upskilling

Valid Combinations = 5 + 6 + 3 + 9 + 3 + 8 = 34.

02. Pre-school

Idea 1: Oyo-fication of Preschools OR Opening our own Preschools/Physical learning centers.

Initial Hypothesis: As more women enter the workforce and families become nuclear, the demand for high quality pre-schools will increase. Parents have started looking at preschools as the first step in a child's education journey, and thus are demanding not only a safe environment, but one which is standardized to high quality and provides a rich learning environment.

1. Structural Analysis

We first should calculate TAM (total addressible market). TAM answers How big could this market be in theory?.

So, the market size is around 1,250-1,300 crores.

SAM (serviceable addressible market) answers What part of this can we actually serve with THIS model? Oyo-fication means we remain as asset-light as possible, bring Brand + SOPs + teacher training + admissions funnel. Our revenue will depend on the take rate, not full fees.

In our SAM, we focus only on top cities, ignore ultra-low fee neighborhood preschools, and premium preschools who won't standardize to our SOPs.

SAM multiplier = 0.7 \(\times\) 0.4 \(\times\) 0.7 \(\sim\) 20%.

So, SAM is roughly 20% of TAM, i.e. 260 crores.

Finally, SOM (servicable obtainable market) answers What can we actually capture in a reasonable time frame?

This depends on speed of city launches, sales cycle with preschool owners, brand trust with parents, and overcoming regulatory friction (state boards, local norms, etc.).

The plausible scale should look like this.

In 5 year horizon, we can obtain 35 crores out of 260 crores SAM. SOM (5 year) is 13.5% of SAM, i.e. 35 crores.

Numbers are decent but this is clearly not a massive market business. It is a high-control, high-outcome (school quality, child development, trust, parental service), defensible roll-up business. The winning will happen by execution density, not blitzscaling. Brand + Ops moat > pure marketplace liquidity.

Our customers are urban parents (age 25-40), dual income, first or second time parents, optimizing for trust over price. The key decision drivers are:

1. Social Proof & Network Effects. Which other parents like me are sending their kids here? Alumni parents matter more than Google reviews. WhatsApp groups, apartment communities, office referrals dominate.
2. Ease of Access (non-negotiable constraint). Distance: \(\le\) 15 minutes walking or \(\le\) 10 minutes driving. On the daily commute path (home \(\rightarrow\) office). Flexible drop/pick timings (\(\pm\) 30 minutes buffer). If it adds friction to weekday mornings, it’s rejected regardless of pedagogy.
3. Safety & Trust Signals. CCTV, Hygiene routines, Staff continuity, Escalation clarity (Who do I call if something goes wrong?), etc., everything matters.
4. Learning Pedagogy. This is secondary, but is now becoming a differentiating factor. Language exposure, Play-based structure, Social skills, routines, discipline, etc., all of these matter. Parents don’t evaluate pedagogy deeply, but they compare narratives.

Preschool fees are mentally bucketed as necessary life infrastructure, not discretionary edtech. Hence, ARPU tolerance is high if trust is established early, especially for first child. Corporates reimbursing preschool/daycare materially increase willingness to pay and reduce churn.

There is no single national preschool regulator. Compliance is municipal/state-level: fire safety, CCTV norms, hygiene & sanitation, building usage permissions, etc. Teachers with formal Montessori / ECCE certification preferred but not strictly enforced. Enforcement increases only after incidents.

2. Execution Analysis

Low upfront licensing friction \(\rightarrow\) good for onboarding. High downside risk post-scale if SOPs aren't airtight. Regulatory exposure increases non-linearly with brand visibility. In this case, regulation won’t stop us from starting. One incident can stop us from scaling.

SOPs are 80% reusable, 20% locally tuned. True complexity is teacher supply, not curriculum. Also, city clustering matters. 50 schools in Bengaluru is easier than 50 across 10 cities.

The current competitive landscape looks like this.

The moat is operational lock-in, not discovery. To build moat, one must:

• Become the operating system, not a marketplace. Need to have own Admissions CRM, Teacher hiring & certification, Timetable engine, Compliance audits, Parent communication stack, etc.
• Make churn really improbable. Data, routines, trust embedded in your system, everything should convince the parent.
• Teachers and staff are going to be the moat too.

Parent CAC (blended): ₹3,000 to 6,000. Early phase: higher (offline + partnerships). Sales cycle with preschool owners: 2 to 4 months. Longer if SOPs reduce owner autonomy.

Channels: (a) Owner acquisition: Direct sales, local brokers, peer referalls. (b) Parent acquisition: word-of-mouth, apartment and corporate tie ups, local search (google maps > instagram).

3. Actual Outcome Analysis

This problem is: Emotionally intense, Repeated annually, and Highly visible to parents. Independent preschools are structurally weak due to: Admissions volatility, Teacher churn, Zero brand beyond 2–3 km, and Compliance anxiety. Our model only works if: Parents trust the brand over the owner. If parents still ask: But who runs this center?, we are just a lead generator.

What we can't prove? Long-term academic success and IQ gains. What we should prove? Safety consistency, Routine adherence, Parent NPS, Teacher stability, Child engagement (observable).

4. Timing Analysis

We see the following trends.

• Emergence of Uber for preschool models. Several startups are emerging that allow parents to rent preschool services by the hour at their convenience. In some cases, they are hiring a homeschooler for a day or on monthly basis.
• Preschools and daycare centers are no longer just a place for the child to be safe while the parents are at work; they are increasingly becoming learning centers for the child to use new toys and visuals to learn languages, about objects, and social skills. This increases the pressure of choosing the right preschool/daycare so that the child development does not lag behind.
• During the lockdown, parents got accustomed to seeing little kids do preschool classes online and use online learning tools. Parents are becoming less wary of their children using electronic devices, giving preschools and daycare centers additional platforms to use in their pedagogy.
• Several corporate employers are beginning to see access to preschool and daycare centers are a part of employee benefits program to attract and retain the best talent. This has created a massive customer acquisition channel for daycare centers and aggregators who are now able to sell to employees through their employers and capture a larger wallet share (if employers are paying).

Why build this?

• Early childhood learning outcomes are under-optimized.
• Corporate channels unlock new wallet share.
• WOM compounds locally \(\rightarrow\) declining CAC over time.
• Demographic tailwinds are real.

Why this is hard?

• Low LTV per child (child is a customer only for a few years)
• Safety risk asymmetry. Too much of safety concerns. One bad incident and the company is gone!
• Ops-heavy, people-heavy. Hence, this is not a techie blitzscale venture. This is a precision operating company.

How would the unit economics look like? This is important to understand the margins.

Our revenue was 72 lakhs (if we have 60 students at 1.2 lakhs). EBIDTA (margin) is around 14% to 27%.

FINAL VERDICT #1:

This business is very opposite to almost every preference.

This is not a stretch. It's a pure mismatch. This business requires: Daily people management, Conflict resolution, Quality enforcement and Emotional labor. For someone who enjoys abstractions, systems, leverage, build once and scale infinitely ideology; this business will feel claustrophobic. We are not doing this business. Not because the market is small, the idea is bad, or numbers don't work. But because this is a people-heavy, ops-dense, reputation-fragile, slow-scaling business that fundamentally conflicts with our founder DNA.

Idea 2: Build Educational Play Apps, STEAM Play kits, Interactive books for Preschoolers

This can be B2B2C or B2C.

Initial Hypothesis: As both competition in later years and parental aspiration for learning increase, parents will want their children to start learning languages, new skills, or even coding and robotics from a very early age. Startups providing offerings for children in preschool or early years of school are gaining a lot of traction, especially in Tier 1 and 2 cities.

1. Structural Analysis

There are two kinds of services that are possible here.

1. Catch Up: Designed for kids in Tier 2+ cities. Or those from a lower income strata or who are first generation English learners. Oftendesigned as English learning apps, to help the child learn the basics of English before she starts formal schooling in order to catch up to the rest of the students.
2. Premium: Designed for kids in Tier 1 cities / urban areas or those from a higher income strata or with educated parents. These services are tailored to help the child learn new words, strengthen concepts like numbers, objects, animals, etc. They engage the child to improve brain development and make the transition to formal schooling smoother.

So, we can easily assume TAM to be around 650 crores.

Let's calculate SAM. Our business doesn't need physical infra and it's a non-mandatory, discretionary spend. So, this is heavily dependent on parental intent.

SAM Multiplier = 0.7 \(\times\) 0.6 \(\times\) 0.8 \(\times\) 0.7 = 23.5%. So, the SAM is around 153 crores.

For SOM, we need to evaluate how're we gonna execute. If we assume strong execution (that requires strong brand, clear differentiation & not just English Learning + Games, efficient CAC control, and no regulatory shock on kids' screen usage), the economics can be assumed as follows.

The plausible scale should look like this.

So, SOM (5-6 years) is around 60 crores with strong execution.

The buyer most often is the most anxious parent in the household, who cares a lot about child's development. Parents decide based on the following factors:

1. Aspirational Anxiety (Primary Driver): Parents don’t buy because they believe in neuroscience or pedagogy. They buy because other kids seem ahead, English exposure is perceived as irreversible advantage, and school admissions feel competitive earlier each year.
2. Social Proof > Proof of Learning: Which app are kids in my apartment using? Is the app being discussed in Whatsapp groups? It's majorly driven by social proof. Measurable outcomes matter less than percieved momentum.
3. Parent Effort Threshold: Products fail when parents have to involve actively rather than facilitating and demands their time > 15 minutes. Also, the setup shouldn't feel cognitively heavy. Parents need outsourced progress, not another job.
4. Price Sensitivity: (a) Catch-up market: highly price-sensitive, churns fast, compares against free YouTube. (b) Premium market: less price-sensitive but extremely comparison-heavy. Will only pay 500-1,000 INR a month if the delight is immediate.

This spend is not education infra (like school fees). It is mentally bucketed as optional enhancement \(\rightarrow\) easy to cancel.

Only one regulation matters here: Child safety and Data privacy. Other than this, there is no formal curriculum approval required, no child safety audits (unlike preschools), no accreditation barriers, and no screen-time regulation for kids (yet).

2. Execution Analysis

Paid ads for parents cost around 2,000 to 4,000 per parent (expensive). LTV to CAC ration is very fragile. Organic word-of-mouth takes time. Without a rigid moat, slow growth allows competitors to copy the product and parents to churn, eventually leading to business death.

Channels: The usual channels are YouTube (parenting content), Influencer moms, App-store discovery (weak), School tie-ups (hard), Corporate HR benefits (emerging but slow).

The modality works only if learning feels like play, sessions are short (5-10 minutes) and in animated cartoon style, rewards are immediate, and parental effort is minimal. This is entertainment-first, learning-second - whether founders admit it or not.

Where can tech help? Tech genuinely helps in adapting difficulty according to child's level, create gamification loops, provide nudges to parents, and create high-quality content delivery mechanisms (like tik-tok style reel & short-form content). Still, tech alone won't be enough here. It doesn't help in creating parental trust, proving outcomes, extending LTV beyond certain age, etc. So, tech is still a leverage, but not a moat.

3. Outcome Analysis

Parent's feel outcomes, they don't measure them. Signals that matter are child repeats words they learnt from the app, child asks to open the app, child shows excitement while engaging with the app, etc. Keeping them hooked to the app will be the holygrail.

Signals like dashboards, skill graphs, cognitive claims, etc., don't really matter. However, one must use them to make marketing easier.

We cannot prove IQ improvement or long term academic edge. However, we can prove metrics around engagement, retention, parent NPS and child delight. Due to no long-term success claim, pricing power and LTV is capped.

4. Timing Analysis

We see the following trends.

1. Gamification of EdTech: AR/VR, animation, characters, two-way interaction are becoming table stakes.
2. English as Social Capital: First-generation learners’ parents increasingly outsource English exposure to apps.
3. Non-academic/Behavioural learning: EQ, confidence, empathy are gaining legitimacy as skills.
4. Global-first GTMs: Markets like UK (7+ exam obsession) offer clearer willingness to pay. India can be positioned as a derivative expansion, not the core.

Why build this?

1. Nascent market in India but evolved market in the US - a lot of scope exists to experiment with the product, payments, pricing, medium, and help define the market.
2. The last 3-5 years have seen tremendous technological innovation in this subsector, making it a very exciting time to be building products in this space

Why this is hard?

1. Small TAM in India. Companies are still to prove the existence of market beyond India 1A.
2. Hard for parents to measure outcomes (unlike in K12 where marks are a proxy, or test prep where college admissions / job offers are a proxy) - making it hard to convince some parents to buy, or increase LTV of existing users.
3. Weak moats and churn is structural.

This is a capex-light, but CAC heavy business. Let's have a look at probable unit economics to understand the margins as well.

We have assumed that average ARPU is INR 6,000 per year. LTV is 1.5 years. This gives gross LTV before CAC as INR 9,000. Let's see what all costs one would need to incur.

This is a margin business with margins around 35% at best. LTV to CAC ratio is around 2.5 : 1. This is acceptable, but not forgiving. Small shocks can break the business model (CAC inflation or churn increase/LTV drop).

From a proper product development perspective,

Assuming 1 year LTV with 6,000 revenue per user, we need 20,000 active paying kids to breakeven. This is not trivial in a high-churn category like this.

FINAL VERDICT #2:

The business looks tough, but doable with some expertise. However, making this a first business is bit risky as its success depends only on execution quality. I'll feel more comfortable and will be able to do better justice with the product once I have deep pockets. For example: I want to create Pixar style movie-based content (long-form content), along with the mobile app with short-form educational content (better spend time on our edutainment platform than on Tiktok or Instagram). Maybe create cartoon-shows or anime for kids just for leisure purposes. Maybe become a Netflix for kids (kinda platforms already exist). I want to bundle this with physical kits, where we also develop skills like learning from the workbooks. Some other experential elements like story-telling, behavioural development, etc. All this will need decent money.

So, this can become a really big business. However, since it is cap-intensive, it's very risky to make this as my first one. I won't be able to pull off phenomenal execution in this space without capital flexibility. Lastly, this idea can wait. Reports likely point out that the derivative markets like India are in nascent stage, while global markets like the UK's 7+ entrance exam prep aren't going anywhere in a few upcoming years.

Idea 3: Preschool Marketplace For Discovery

Initial Hypothesis: There is a need of a discovery platform for preschools and daycare centers, allowing parents to find a center that matches their needs.

I'm not a big fan of this idea for two reasons:

1. Even if the platform tells me the best preschool based on my needs is 15 km away from my office or home, I am not gonna opt for that preschool. I need something that is convenient to the home or office commute. So, anything beyond a 2-3 km radius is out of my discovery needs.
2. I don't see this feature alone to be that valuable to be monetized reliably. ProEves is the startup that has tried this model with some success, but they are also involved in oyo-fication of preschools (alternate revenue scheme).

FINAL VERDICT #3:

We are not doing this business.

03. K12

Idea 4: Operational SaaS & Services for Schools & High Schools

Initial Hypothesis:

Idea 5: Unbundling Services in Schools & High Schools or D2C

Initial Hypothesis:

Idea 6: K12 Marketplaces

Initial Hypothesis:

04. Test Prep 1

Idea 7: Coaching Institutes

Idea 8: Coaching Marketplace

05. UG & PG

Idea 9: Operational SaaS & Services for Colleges

Idea 10: Skill Enhancement Offerings in Colleges

Idea 11: Skill Enhancement Offering - D2C

Idea 12: Launching Our Own College

Idea 13: UG & PG Marketplaces

06. Test Prep 2

Idea 14: Coaching Institutes

Idea 15: Coaching Marketplaces

07. Upskilling

Idea 16: Upskilling Platforms for Corporate

Idea 17: Upskilling Platforms - D2C

Idea 18: Upskilling Marketplaces