Edtech: China’s loss could well turn out to be India’s gain, says Nikhil Mahajan, co-founder & ED Finance, CL Educate

Nikhil Mahajan, Co-Founder & ED Finance, CL Educate

Education company CL Educate has two verticals, ‘consumer’ and ‘enterprise’. While the test prep brand Career Launcher is part of the former vertical, the latter is famous in B2B circles as Kestone. “Covid-19 was an opportunity for us to scale digital businesses,” says Nikhil Mahajan, co-founder & ED Finance, CL Educate. In an interview with FE’s Vikram Chaudhary, he adds that on the ‘consumer’ front the company’s digital business delivered 4X revenues during the period, and in the ‘enterprise’ segment geographical expansion played a key role in growth. Excerpts:

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The edtech space is getting increasingly competitive. How can CL Educate differentiate itself?

Five pillars that will allow us to compete efficiently in the edtech space are ‘market segments’, ‘product offerings’, ‘place’, ‘cost’ and ‘cutting-edge technology deployment’.

Currently, Career Launcher has market leadership in three segments: MBA, law and BBA/IPM. Adding market leadership in another two major segments is critical to profitable growth. What distinguishes Career Launcher from others is our physical network. Despite Covid-19, our physical network of more than 100 business partners has survived. With cutting-edge technology deployment in product and customer engagement, CL Educate is well poised to take on the emerging competition from edtech players.

China recently announced a crackdown on its edtech ecosystem. How will that impact India?

Consolidation in the edtech space is long overdue, and it comes as no surprise that organisations that have achieved some level of scale are consolidating under a common banner. Additionally, with a number of start-ups plush with funds from investors, buy overbuild is an obvious way to achieve scale, cutting the lead time to becoming successful in a marketplace. We ourselves did it as early as 2004 with our acquisition of Law School Tutorials that we built into a dominant brand in the law test prep arena.

China’s crackdown is an interesting twist in the sense that investors have been forced to bleed money in a market they were previously minting. China’s loss could well turn out to be India’s gain, with investors turning to India, where there is potential for similar growth and a massive market, and with considerably greater stability.

This decade could well be the era of Indian edtech, much like the 1990s were for the IT sector.

So, will the Indian edtech space get more and more consolidated?

While consolidation is no doubt under way, there is room for a lot more, and what enables this is the tremendous depth that already exists in this space and how almost infinitely scalable it appears. We foresee 4-5 large, profitable, listed edtech stories playing out in the coming years. We also believe that some of the large industrial houses will make a strategic entry into education by focusing on asset-light, technology-driven products and services models. The Tatas, Reliance, HCL, Wipro are already invested here in some shape or form.

Can that be a cause for concern for brands like CL Educate?

We have had a head-start, and are the only listed edtech currently. With cutting-edge technology, we are pivoting from a services-alone company towards becoming an edtech product company in the next three years. Our aim is that, in five years’ time, at least 33% of our revenues should be product-based, thus making it hugely scalable. Premium teaching and mentoring services built on top of these scalable products will continue to contribute the bulk of the remaining revenues.

What is your outlook for the next year for the Indian edtech and test prep space?

There is no doubt that due to Covid-19 consumer behaviour has changed forever. While there will always be those who will need face-to-face teaching, the forced exposure to cloud classroom and its acceptance as a quality medium of delivery is no longer in doubt. With China putting its edtech companies under enormous pressure and investors expected to pull out rapidly, I expect a large chunk of that funding to flow India’s, and that should enable faster scaling up of India’s edtech companies.