Education Sector: The ‘hot’ verticals

Education Sector: The ‘hot’ verticals

K12, Higher education, Tutoring, Test Prep, Vocational education, Pre-schools.

K12

Current market size: U.S. $ 20 billion

Estimated market size (2012): U.S. $ 28 billion

Organized Players: Educomp, Career Launcher

PE Investment in this segment: Gaja Capital

Opportunities and challenges for entrepreneurs

  • Focus on career development, rather than just clearing exams
  • High barriers to entry (CBSE, AICTE approval etc.)
  • Significant supply-demand imbalance
  • Managing regulatory environment and infrastructure development is key

 

Higher education


 

Current market size: U.S. $ 7 billion

Estimated market size (2012): U.S. $ 11 billion

Organized Players: Manipal education, Career Launcher,NIIT

PE Investment in this segment: IDFC PE, Capital International, Intel Capital

Opportunities and challenges for entrepreneurs

  • Focus on skill development
  • Challenging regulatory environment
  • Significant supply-demand imbalance
  • Offering career services and helping students find jobs

 

Tutoring


Current market size: U.S. $ 5 billion

Estimated market size (2012): U.S. $ 8 billion

Organized Players: MT Educare

PE Investment in this segment: Helix Investments

Opportunities and challenges for entrepreneurs

  • Getting students ready for higher education
  • Highly fragmented.
  • Very important segment since quality of education at schools not up to the mark.

 

Test Prep


Current market size: U.S. $ 1.6 billion

Estimated market size (2012): U.S. $ 3.3 billion

Organized Players: FIITJEE, Career Launcher, IMS, TIME

PE Investment in this segment: Matrix Partners India

Opportunities and challenges for entrepreneurs:

  • Low barrier to entry
  • Highly fragmented
  • Word of mouth marketing is the key

 

Vocational education


 

Current market size: U.S. $ 1.4 billion

Estimated market size (2012): U.S. $ 2.9 billion

Organized Players: Global Talent Track, ICA Infotech,UEI Global

PE Investment in this segment: Intel Capital, Sequoia Capital, Helion Ventures

Opportunities and challenges for entrepreneurs

  • Very important segment for bridging the skill gap
  • The industry has to take the lead to enhance quality of vocational education
  • Industry-approved certifications can transform the industry

 

Pre-schools


Current market size: U.S. $ 1 billion

Estimated market size (2012): U.S. $ 3.4 billion

Organized Players: Tree House Education, Eurokids,Career Launcher

PE Investment in this segment: Matrix Partners India

Opportunities and challenges for entrepreneurs:

  • Catchment area is tiny. The school has to be in the neighbourhood
  • High capital expenditure
  • Parents not willing to pay a premium