Michael and Susan Dell Foundation (MSDF)-backed Gray Matters was started with a simple vision of helping affordable private schools measure school performance, and suggest improvements
Today, in India, there are over one lakh affordable, private English-medium schools targeted at children from low income and middle-income groups. The children join these schools in the hope of achieving a social upward mobility. However, there is no proper system in place to measure the impact these schools are creating, and even monitor the progress made by these kids. Pradeep Sharma, an MBA from Asian Institute of Management and a former employee of Infosys and HCL, saw potential to build a non-profit organization focused on measuring key metrics in a school and result in enhancing the following: enrollment, learning outcome, teaching quality and overall patient satisfaction.
“We were interested in disrupting this space but one of the primary challenges we faced was, we didn’t know how many schools are there in each city, what are the challenges they face, what is their affordability quotient to improve their offerings and such. That’s when we thought we’ll increase transparency in this space in order to help schools offer better quality education,” shares Sharma. Thus was founded Gray Matters Education Pvt. ltd in early 2014, with the primary objective of rating schools based on a set of tests which included school infrastructure audits, live classroom management observations, standardized tests for children, focus group discussions with parents and more.
EVOLVING FROM A NON-PROFIT TO FOR-PROFIT MODEL
Initially incubated by Gray Matters Capital, the company followed a declining subsidy model with the first 35 schools in Hyderabad. Meaning, since the schools had restrictive budgets, the company didn’t take any fee during the first year with the company taking on 100 per cent of the cost. During the second year, the company owned up 90 per cent of the cost and the school covered 10 per cent. In the third year, the school owned 25 per cent to 50 per cent of the cost and so on. While this helped Gray Matters gain the initial trust and traction, soon, the team realised that it needed to build a financially sustainable model. “We wanted to focus on making our offering better rather than thinking we’re doing a great service. And, we didn’t want to force schools to sign up with us but allow them to choose our services. In fact, when I deliver higher value, I can sign up more schools,” reasons Sharma.
Thus, in December 2013, Gray Matters spun off into an independent entity and positioned itself as an educational diagnostics and analytics company. The company’s vision was to use data to help schools take better decisions and monitor their progress over time.
PLAYING ON AFFORDABILITY
Despite becoming a for-profit model, the company had to innovate on several fronts to keep its pricing affordable (given the segment its solutions are targeted at). Thus, it focused on two segments to balance this – managing cost of acquisition and cost of delivery.
Cost of acquisition, as we all know, is the sales and marketing cost. Instead of going from school-to-school with a sales pitch, the company partnered with solution providers such as SEED and iDiscoveri, which already have a partnership with several hundred schools. A second strategy was to partner with NGOs, which hold programs that benefit schools in this segment, a good example being the School Leadership Program by India School Leadership Institute. “Apart from this, we also do our own workshops on topics such as implementation of technology in schools, importance of independent assessment and more, where we invite 30 to 50 schools,” shares Sharma. At such instances, the company builds a relationship of trust with the schools and offers its solutions as the next step.
On the other hand, to reduce cost of delivery, it channelizes its non-value add and repetitive activities (such as holding tests at schools) to college graduates, employing them at minimal salaries. Where analytical or developmental activities are involved, it employs people with an established experience.
In February last year, the company raised Rs. 4.5 crore from Michael and Susan Dell Foundation, the funds from which were channelised towards developing technology and creating a for-profit model. “MSDF was associated with us in one way or the other for the past two years. And, they were following our growth closely. Thus, fund raising from them was a natural next step, not something that happened at an instant,” reveals Sharma.
This year alone, the company has reached out to 2,500 schools and has established a presence in Hyderabad, Bengaluru and Mumbai. It has serviced over 600 schools, impacting over 300,000 students.
Going forward, its key focus areas lay in incorporating tablets and downloadable apps into the system to make assessments easier and to give schools higher exposure. Overall, it aims to partner with 5,000 schools in about five years, and achieve an operational break-even in a year and a half.