This article is written by Priyanka Cholera, pursuing a Diploma in Business Laws for In House Counsels from lawsikho.com.

What is an education startup?

Education Startup is the corporate term for coaching classes or supplementary education. The core mechanism is the same, the key difference between a startup and a homerun tuition is that the education is sold as service and Ed startups offer client professional relationships.  In India coaching has not been an add-on but a substitute for education. There are a few handful of schools that don’t require children to go to supplementary classes. The biggest coaching hubs fall into the following criteria:

Entrance	Arguably the biggest market in India, IIT, JEE, Civil Services, Judiciary, Net, CAT, CLAT almost every entrance has coaching class related to it.
Professional	Professional courses like CA, CMA, CS are the bread and butter for the biggest names like JK Shah.
Academics	Supplementary education for all academic subjects.
Niche Specific	Niches related to profession, e.g. Contract drafting, article writing, GST courses etc.
Skills	Coding, Digital Marketing, Graphology, Cosmetology, MIS, Microsoft office, Coding, Yoga etc.

The supplementary education has earned itself the title of an industry by experts that claim it to be an industry that generates revenue that stretches into billions of dollars. 1 in 4 children attend private tuitions, the industry that thrived by college students or housewives trying to make an extra buck is no longer “just a side income” after the introduction of startup culture and tech giants making their way to every smartphone in the country.

Why are technology based education start-ups the next big thing?

Do you remember those Sundaram classroom lesson pen drives? Well, that was the beginning for Technology stepping in the middle class family income group. I would really like to draw your attention to recent news of 14 Indian Edtechs startups that raised funding during lockdown, White Hat Jr was sold to Byjus at $300 Million after 18 months of its commencement. Bjyu’s added 6 million free users to its platform, Unacademy achieved 1 billion views and Toppr app has increased its growth by 100%.

Since the lockdown has begun every moderately qualified individual, especially young students have enrolled themselves into some or the other courses. Not just academic but mediation, yoga, mandala art etc.

Today learning is holistic. It no longer matters what background you belong to or what is your budget, there are courses available ranging from free (available on Edex, Coursera, Udemy) to lakhs of rupees, depending on your budget. This flexibility is not available for offline courses. 

A student has migrated from Jharkhand to Mumbai for college, has to look for a new place to live away from family, find a source of income to pay rent as well as other expenses. The stress and anxiety that a student might experience cannot be measured. Lockdown has taught us all that education can be distant and successfully accomplished, of course it cannot replace the entire virtue of offline learning, but it can supplement it and if we can accomplish this as a country millions of students will be enabled to study.  

Let us look at the importance of EdTech startups.

What is the socio-economic importance of an EdTech startup?

EDUCATION IS PRIVILEGE

Do you remember the recent movie Super 30?

Let me give you a personal example-

I am from State Board School in Maharashtra and have studied for the SSC curriculum, even though my alma mater was one of the finest in town it did not cater me skills required for the 21st Century. After stepping out of school I realised the intellectual superiority and additional skill set students from ICSE or International Board have. 

Presently, even though I am pursuing law there is a part of me that believes, had someone back then taught me Physics or Chemistry in a way a 10 year old will ask questions on it, I could have had different academic interest. There are studies that show education is an environment not just a curriculum.

Coming back to our question, let us understand the importance of Edtech startups by answering the following question.

Does India have a budget for education as much as these startups do?

Let us have a simple calculation, Indian Government has passed a budget of INR 99,000 Crores for Education in 2020 for a population of over a billion people. On the other hand, Edtechs like Bjyu’s is valued at $10 Billion and Unacademy has secured valuation of $ 1 Billion in 2020, both apps combined don’t have more than 10 million paid users. 

To not over complicate things, the simple question is, does India spend on education as much as  these Edtechs do for its Subscribers?

I have been working with underprivileged children for more than a year now, and one aspect of traditional education I feel paranoid about, is the holistic development of the child. They just study because they have to, there is no exposure to skills, spirituality, personal hygiene, values, etc. Their life schedules have taught them that education happens only in classrooms and technology is just for watching content. I personally believe if these children get the right mentoring from the start, not only will they take an initiative to study but also put the internet to good use. 

Children who live in shelter homes or orphanages have to leave their care at the age of 18, they have to work as well as study and the majority of them drop out. If these children have access to recorded lectures and Pay as you learn system, they would not have to compromise on the education they deserve.

I am very grateful for online lectures because pre-lockdown, I’d had to wake up early at 4:30 am to attend college at 7am every day. 

You won’t be surprised to know that there are lectures by Stanford professors on Youtube on topics such as neuroscience. 30 years ago, if you wanted to attend Stanford’s seminar you’d have to be in the States. Technology has enabled revolution in education, and to quote Elon Musk, “Either we can be part of it or watch it happen”

The question that naturally follows from this is how will one get started on this process. Let’s read on to find out more. 

How will your education startup work?

Let’s make a plan right now by answering a few questions.

Who is your target audience/clients?

The answer to the above question will decide the whole structure of your business. Don’t underestimate any age group or scope of your business based on age group, Netflix sells only one service at $8.99 Subscription.

Remember no matter how much you boast about your courses or experts, if you’re unclear about the audience you want to cater to in the first 5 years of business then there will be no foundation for branding. Let’s take Amazon for case study, it started as a Business to Customer selling platform, and later added Prime, Amazon Pay etc. So first decide, what age group you want to cater to; don’t worry about the numbers, we’re a country of billions.

If your target is children from age 2 to 7 – then you cannot bring complex pie charts or PhDs on board. Your mode of communication has to be extremely engaging but it should not be addictive for them, because any signs of addiction to the device will be a red flag for the parents and it can damage your purpose. Interest in children’s mental wellbeing should not be compromised regardless of what mode of communication you do. In fact you can have poems and rhymes, anything that helps children learn new words in a way that if the child is facing any learning difficulty parents can identify it.

From 7 to 14 years – this age is a learning curve. This is the age parents want their children to incline towards subjects like Mathematics and build a temperament for Science and participate in competitions like Olympiads, as a provider it will be your job to ensure these subjects are delivered well and generate curiosity. At this stage, (in my personal experience of teaching) children do not like to sit at one place. You might hire the best graphic designer there is, but I can assure you, the attention span is least developed for the children aged from 7 to 14.  So, you can try experiential learning that involves as many activities as possible. For example, in order to conduct a  lecture on Pythagoras theorem,  instead of teaching it the traditional way you can ask students to measure their living room and apply the Pythagoras theorem to know how it works or you can arrange a lecture involving architects that can explain how much useful geometry is in their profession. The same approach can be used for social sciences and literature as well. 

From the age 14 to 18 years – for this age group you have to prepare two separate curriculums, because in India, after completing your boards you have to decide a major. However, after the introduction of the New Education Policy, things might look different. Parents of this age group will focus only on marks in academics. Hence, even if you don’t spend much on graphics that’s fine, you have to spend on experts that know the paper patterns or curriculum very well. Also, the pre-adolescent group is quite fickle on attention, hence to ensure your success weekly or monthly counselling sessions are advisable. 

From the age of 18 and above years – if you decide to serve the said age group, all concerns about the graphics and curriculum are not as water-tight as they were for younger age groups, but you will be facing cut-throat competition in the market. Every corner of metro cities like Mumbai and Delhi have a coaching institute. If a parent or a professional is investing Lakhs of rupees for clearing entrance, they’d rather enroll in the classroom than sitting at home in front of a computer. How will you convince them that your teaching methodology is far better than those who are in the game for years. For this age group your social media presence, ranks, placements, success rate should be available everywhere.

How to structure an optimal result oriented teaching methodology?

Curriculum: As we discussed earlier, the curriculum will be decided on factors such as age group and target audience. Your curriculum will be the USP that will be the face of business. For e.g. LawSikho caters only to law-related courses but it is not necessary that only lawyers or law students take up their course. Professionals like HR, Businessmen, CAs, CS’ etc everyone is a potential customer. One of the biggest selling points of curriculum in India is the test practice. How close or similar are your evaluation methods for your curriculum – all of these are important factors to be taken into account.

For example, if you’re prepping for entrance, what is the accuracy of mocks, how many doubt clearing sessions take place in a week, how efficient is your query solving mechanism. 

Teaching Methodology

This will be the heart and soul of the business. A good subject taught by a bad teacher is still bad. As a student who has been part of classrooms all her life, one of the reasons coaching is effective is that the focus is on what is being taught and how it is being taught, rather than who is teaching it. Online/live classes should be exclusively for tutors and for videos on basic topics animated ones just do fine. Keep in mind, that if you’re substituting schools, you’re substituting them for better. You have to ensure that online classes have maximum attention for each student, simpler notes, that it is a safe space for all genders and casters etc. 

Hiring tutors/teachers 

Before hiring tutors from personal experience, I would suggest you to hire a Child/Adolescent Psychologist or Human Development Psychology expert to train the tutors in engaging with students. Majority of successful startups have their audience ranging from 6 to 25 years of age. People of the said age group are not only easily distracted but also they have problems in personal life that might not make them click on ‘Join Class’.

Parents will be paranoid as their children will be vulnerable to many strangers. However it is on your part as the founder to ensure due-diligence is done about the teacher’s history and credibility.

You can ask the tutors to send a 10 min video of explaining the concept and pay them as much as they deserve, not only industrial standards. Content can be as good as you want, if it isn’t delivered well, then all efforts will be as good as nothing.

I can tell you from personal experience that children everywhere are the same, regardless of the school or place of residence, they’re just people who don’t know better. There is so much content on the internet that it’s confusing and misleading. If your tutor can explain concepts and fact check, that’s the ideal combination you’re looking for.

Another, very crucial aspect is that of promotional marketing. Let us read on to know more on this aspect. 

Promotion marketing

How will you reach students?

Success Rate and demonstrate knowledge. 

If your efforts are translated in results for students, no other validation of quality is required. However, to convince students at initial stages will be difficult. It might sound cliche but portraying your knowledge is the most effective way  of getting people on board.

Building Brand won’t happen overnight. It will take constant efforts to gain trust and credibility. But while you’re building a reputation for results, you can release samples of curriculum, arrange podcasts, newsletter or short videos on topics of expertise etc. In addition to building a brand, it is also important to maintain transparency about the faculty involved. If you’re arranging live lectures or one to one counselling session for students, it is important that there is a background check about the faculty involved as well as keeping the students informed about it through social media.

Further, for any start-up, funding is one of the most integral aspects to get started. 

Funding/investors

To be very honest, at the beginning of any business, focusing on Business Structure i.e. what does your business look like and how will you implement it? For e.g. Once you have a clear vision about who will be your target audience, the curriculum, having the right teachers and business development professional, software developers, evaluation system all these aspects are very important.  Funding, investors, members, partners, and compliances all can be taken care of once your business sounds promising or you have a concrete plan in place. After you have run through the entire process this article has spoken about until now and you’re clear about your vision, then money is the only thing you will need to focus on. 

You will find leads online or through consultancy services. 

Omidyar Network, Owl Ventures and Nexus Venture Partners, these are the investors of WhiteHatJr, I found out because it was easily available online. 

Remember it’s a two-way street, if you’re looking for an investor, even investors are looking for a promising startup to secure an equity share.

There are several lists available. Several websites that will assist you. But it’s all an aftermath. One of the reasons you might be reading this piece of article is that you’re looking for ways to set up business first.

Connections and contacts are procurable within the industry once you have a plan laid down. In conclusion don’t worry about the money. It will come around, one way or another. 

List of investors you can look out for if you’re contemplating gathering funds.

• https://www.indianangelnetwork.com/ 
• https://inc42.com/resources/top-37-angel-investors-india
• https://www.sumhr.com/blog/top-45-angel-investors-in-india

Documentation and registration requirements

I don’t want to confuse you, at the cost of me sounding smart, after all you might hire service for it, rather than getting into the mess of documents. But here are some questions you should ask the professional you’re assigning work to.

Compliances for an EdTech start-up are very basic.

• Register as Partnership (won’t endorse it because you’d be personally liable and it’s not advisable if you’re looking for investors) or LLP or Company.

If you’re paranoid about registering as an LLP, I’d like to add that LLP not only attracts fewer compliance but also has the following benefits.

1. Since LLP has no limit on the number of Partners, as an investor one can directly share profits without paying Dividend Distribution Tax (which is payable in case of buying shares in a company).
2.  Flexible Audit Conditions either do audit if turnover is more than 40 lakhs.
3.  LLP can be a shareholder in any company and a Company can be a partner in LLP.
4. More transparency, decision making and Authority as Investor- partner than as a Shareholder.
5. You can pay salaries to partners from profit and that will not be counted as profit hence Tax Benefits.
6. Carryforward loss system, unlike Companies that have provision of Minimum Alternate Tax.
7. Companies have mandatory Annual General Meeting and AOA, MOA etc as compliance. 

If you’re in your baby years then don’t shy away from being an LLP for safety measures, you can add a milestone clause in the Co-founders agreement that reads, after the startup generates a revenue of 5Crs it will be converted into a Company.

•  For maximum tax benefits that are provided to startups by the government I’d suggest you be recognised as a startup with DPIIT for tax benefits. i.e 80 IAC Tax exemption which means no tax for first 3 years out of 10 years of incorporation, the other benefit is Tax Exemption under Section 56 of the Income Tax Act (Angel Tax) which means if your startup is listed which share premium value less than 25 Crs than there will be no tax on it. (this facility is available only to startups recognised by DPIIT.
• You need to have IP rights such as the trademark and copyright of your startup.
• Have a GST registration number. 

If you’re having a real estate classroom then, 

1. Shop and establishment Act license by local police station. 
2. Ensure that your establishment is fire hazard proof.
3. Keep all the documents like Address proof and company incorporation proof in check.

You can read in detail at https://blog.ipleaders.in/coaching-centre-licensing-registration-norms/

Conclusion

In conclusion, we’re a country of a billion people, the importance of education and 21st century skills is growing among middle class families. Before the technologies came in we had Intellects who made their way up the ladder without any help, so the goal is not only to easy out the path and make it pebble free, it is to encourage more people walking on the path. If a student is living in a tier 3 city dreaming of building a robot he should have all the guidance to do so. Your Edtech startups might have the potential to enable every child of this country to dream and achieve what they deserve. Education will empower and influence all walks of life, let no one tell you otherwise. 

References

• https://www.businessinsider.in/budget/news/indias-education-budget-2020-allocation-news-and-updates/articleshow/73824561.cms#:~:text=The%20Finance%2 0 M i n i s t er%20Nirmala%20Sitharaman,crore%20towards%20the%20education%20fund
• https://yourstory.com/mystory/c72b40558a-the-demand-supply-gap-of-tutoring-in-india
• https://realestate.siliconindia.com/viewpoint/cxoinsights/a-glance-into-the-indian-home-tuition-market-in-numbers-nwid-10616.html#:~:text=Indian%20Private% 2 0 T u i t i o n%20market%20estimated,%2425%20billion%20by%20year%202020
• https://www.businessinsider.in/business/startups/news/14-indian-edtech-startups-raised-funds-amid-the-covid-19-pandemic/articleshow/75667869.cms 
• https://techcrunch.com/2020/08/05/indias-byjus-acquires-whitehat-jr-for-300-million/

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