Inflated valuations put edtech sector at risk: Screwvala

The noise around 'one or two'edtech firms could pose significant issues for the entire sector, and unless inflated valuations correct, sanity will not prevail in the industry, warned Ronnie Screwvala, co-founder of the learning platform. UpGrad and a serial entrepreneur.

- Sneha Shah & Ranjani Raghavan

"One or two players have given the entire sector such a bad name," Screwvala said in an interview while drawing a distinction between K-12 education and UpGrad's focus on upskilling and professional development courses.

Education startups broadly focus on the K-12 (kindergarten to Class 12) segment, test preparation (coaching for engineering, medical and other competitive exams), and higher learning.

"In the K-12 sector, the Rol (return on investment) has been poor. The big problem with K-12 has been zero cost of capital, flimsy business models and very low outcomes and Rol, and whether we like it or not, very aggressive selling, led by very aggressive marketing-That's the bonfire," Screwvala said.

Valuations also need to temper in the edtech sector, he said.

Byju's, the biggest education startup with programmes in K-12, test prep and upskilling, was last valued at $22 billion, but investors such as Blackrock and T Rowe have recently marked it down to about $12 billion.