UiPath: On the Path to a Blockbuster IPO?

by Sandeep Kumar | April 21, 2021

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UiPath is a pioneer of the Robotic Process Automation industry. The company filed its first S-1/A this week, setting an initial price range for its shares. Shares are going to be listed in the price range of $52 — $54 bringing the valuation to $26.90 Bn — $27.90 Bn. It is all set to launch the IPO under the ticker ‘PATH’ on the New York Stock Exchange.

Incorporated in 2015 and headquartered in New York, UiPath develops computerized workflows to build, manage, measure, and engage with processes. Customers benefit from the platform’s innovative capabilities by eliminating work spent on time-consuming, repetitive, and tedious tasks.

The company’s products have become increasingly attractive for companies looking to boost productivity. This is especially true amid the global pandemic that has enforced technology and automation adoptions. The demand is much higher than initially expected. This has been driving the demand for IPO and the investors are bullish on the ‘PATH’ stock.

Company Snapshot 

  • Annualised Renewal Rate (ARR): $580 Mn
  • Annualised Renewal Rate growth Yoy: 65%
  • Total Customers: 7,968
  • Customers ≥ $100k
  • ARR: 1002
  • Dollar based net retention rate: 145%
  • Net Loss: $92 Mn

So how does UiPath make money?

Product Offering: The end-to-end platform provides a whole range of robotic process automation via a suite of interrelated software offerings. The flagship product offering, the UiPath Studio is an easy to use, drag-and-drop development platform designed for RPA developers engineering complex process automation. Other offerings include the UiPath Robot which emulates human behavior to execute the processes built-in Studio and the UiPath Orchestrator that tracks and logs Robot activity.

Market Model: UiPath has an efficient go-to-market model, which consists primarily of an enterprise field sales force supplemented by a high velocity inside sales team focused on small and mid-sized customers, as well as a global strategic sales team focused on the largest global customers.

Revenue Model: UiPath generates revenue from the sale of licenses for its proprietary software, its maintenance and support, and professional services. The license fees are based primarily on the number of users who access the software and the number of automation running on their platform. The license agreements have annual terms, and/or multi-year terms. Additionally, UiPath provides maintenance and support for its software as well as non-recurring professional services such as training and implementation services.



License (57% of revenue): UiPath’s primary business model is selling licenses through annual and multi-year subscription contracts. Being 57% of its business it shows a vibrant business model and the right product mix which is well received by the market.

Maintenance and Support (38% of revenue): The relatively large amount of maintenance and support revenue suggests that the customer base is being retained.

Services (<5% of revenue): A small part of its business is customer education and technical services likely around their UiPath academy.

UiPath’s Road to Dominance

UiPath is at the forefront of technology innovation and thought leadership in automation.

Companies such as UiPath have two ways to grow: either blasting through the market and acquiring more and more customers or be more docile and focus more on retention than expansion. UiPath chose the former. The company expanded internationally very early on, acquiring more and more customers from different nations. The growth was absolutely out of control.

Surprisingly, this does not mean that UiPath compromised on customer retention, the killer of all SaaS companies. UiPath managed to find the middle ground between blatant expansion and customer retention. The S-1 reveals an extremely high 96% “gross retention rate” and a dollar-based net retention rate of 145%. So, this says UiPath’s existing customers are spending more with the company and also sticking with it.

The Robotic Process Automation Landscape

According to an estimate by Bain & Company the size of the market for automation software will grow to approximately $65 Bn.

The market for automation is super-hot right now with the COVID pandemic making automation a dire necessity. UiPath is the clear market leader in this category. The S-1 puts their Total Addressable Market (TAM) at $60 Bn. Pre pandemic this figure stood at $30 Bn. Double the market size, in just under a year. That’s some serious growth.

It is clear that UiPath wishes to tap into the red-hot IPO market and rightly so. It needs to pad its balance sheet with as much cash as it can muster for the massive opportunity and the competitor risk it faces ranging from its peers such as Automation Anywhere to the giants like Microsoft. The principal purposes of this offering are to increase its capitalization and financial flexibility.

This is data from the Brookings Institution and the Organization for Economic Co-Development that depicts productivity statistics for the U.S. The smaller charts on the right are for Germany and Japan.

                                  Source: Brookings Institution and the Organization for Economic Co-Development 

The US showed productivity growth in ’95-’04, but that slacked off later. Similar is the case with Germany and Japan where the productivity levels have been falling continuously.

Humans are slowly reaching the very limit of what they can do alone to solve the most pressing challenges around the globe. Automation is what can free up labor and divert human intelligence and creativity into more engaging and worthwhile problems. The market is ready for automation and the post-pandemic world will witness never seen before levels of automation. 

Key Industry Risks

  • Barriers to Entry: Robotic process automation is very difficult to implement and therefore many organizations will not able to implement it thereby affecting the industry growth.
  • Sustainability: Any automation, no matter how advanced is not capable of perfectly emulating human behavior.
  • Affordability: The entire automation process is a costly proposition and affordability is an issue.

Key Company Risks

  • Growth Opportunity: The revenue growth rate of above 80% YoY may not be sustainable in the future due to the maturation of the business, increased competition, and changes to technology.
  • Limitations to Scalability: While the UiPath platform is intuitive and beginner-friendly, intra-organizational scalability poses an issue. Also, many features offered by UiPath are offered for free by other productivity platforms.
  • Pitfalls of Constant Innovation: Automation and Productivity Software is a fast-changing landscape. UiPath will need to disrupt itself to stay relevant.

Financial Highlights

Revenue: Total Revenue of $336 Mn in 2020 grew to $607 Mn in 2021, a YoY growth of more than 80%. Most of the increase was fuelled by the maintenance fees and other incomes. A 71% increase in license fees indicates a very fast-growing customer base.

UiPath has gone from making $169 Mn in the last quarter of FY 2019 to $580 Mn in the last quarter of FY 2021.

Gross-profit Margin: The gross profit margin stands at 90% and has increased from 72% in 2019 to 90% in 2021. This comes on the back of reduced travel costs due to the COVID pandemic and rapid international expansion which generated 66% and 61% of the revenue in 2019 and 2020 respectively.

Net-profit Margin: The Net Loss has also been improving over time, in spite of the break neck speed that UiPath seems to be growing at. This is explained by the Operating Expenses Line Item where all the three viz. licensing costs, maintenance costs, and other costs should have gone up, keeping in line with the revenue growth. On the contrary, all the three went down, while as the revenues shot up.

Cash Flow: Unlike a lot of other growth startups going public, UiPath has a positive free cash flow, saving cash on the operational front. This is rare for a rapidly growing company. Other growth stage companies to go public such as Snowflake and CrowdStrike had negative free cash flows. Quite a few haven’t made money, even months after listing.

This may pose a concern for investors who view UiPath to be a rapidly growing, disruptive startup. Generating cash may be interpreted as a sign of UiPath transitioning into its mature stage.

Alternatively, the plan may be, to slow down the growth, settle down, consolidate the customer base and the product offering, and then continue explosive growth. Daniel Dines, the founder of UiPath has been an unconventional CEO on many fronts, this may as well be a part of the bigger picture.

Other Interesting Tid-bits

Annualized Renewal Rate (ARR) is the key metric UiPath uses to gauge its business. It illustrates the ability to acquire new subscription customers and to maintaining the existing subscription customers. The ARR may fluctuate as a result of a number of factors, including customers’ satisfaction, pricing, competitive offerings, economic conditions, or overall changes in customers’ spending levels.


UiPath’s “ARR” rose by 65% over the last year, indicating a massive jump in the number of new consumers using UiPath. This again highlights UiPath’s ‘expanding, yet retaining’ value proposition.

  • Number of Customers: 6,300
  • Number of Enterprise Customers: 1,500. As of January 31, 2021, UiPath had 7,968 customers, including 80% of the Fortune 10 and 63% of the Fortune Global 500.
  • Number of Developers on the UiPath platform: 200,000
  • Number of People enrolled in UiPath Courses: 100,000

Is UiPath prepared to handle the competition?

The platform addresses the market for Intelligent Process Automation, which International Data Corporation, estimated would have a value of $17 billion by the end of 2020 and is expected to grow at a four-year compound annual growth rate of approximately 16% to $30 billion by the end of 2024. According to an estimate by Bain & Company the size of the market for automation software will grow to approximately $65 billion.


UiPath is a market leader in the Automation industry commanding a whopping 44% of the entire market.

Nearly every company’s a winner that gets to feature in the RPA Magic Quadrant from Gartner, and even just getting on the chart is a win for some companies. UiPath ranks very high, at the very top right of the matrix, strongly positioned as an industry leader as well as a visionary, with only Automation Anywhere coming close.


Source: Gartner’s RPA Magic Quadrant

The UiPath IPO will be a decisive moment for not just UiPath itself, but also Automation Anywhere. A tie-breaker between the two, the UiPath IPO will either force Automation Anywhere to respond with an IPO or simply perish.

Are the Valuations on the Right Path?

The NASDAQ 100 Technology Index is up by 62%, this year alone. This coupled with the high demand for the RPA products worldwide, and you get a red-hot market for the UiPath IPO. This is likely to benefit UiPath massively but is the valuation justified or the financials go for a toss?
UiPath was valued at $35 Bn following its last financing round in February. Based on a recently released statement by the management UiPath is likely to launch IPO with shares in the price range of $52-$54 bringing the valuation in the range of $26.90 — $27.90 Bn. This brings the EV/Revenue multiple to 45.88x.



How well do the Peers Fare?

Being the market leader with a 44% market share and its colossal size relative to the peers it is difficult comparing the company to its peers. However, we have compared it to its direct competitors Automation Anywhere (Private Company) and Blue Prism (London Stock Exchange: PRSM).

Taking the Taking EV/Revenue multiple into account and weighted average calculation of the comparable companies, we arrive at an NTM multiple of 12.33x which gives us an intrinsic valuation of $8.96 Billion.

Investment Recommendation

The UiPath IPO in any case is highly anticipated, being a market leader in the red-hot Robotic Process Automation market. The company has a strong reputation and a substantial client base. Despite that, it was a bit of shock that the IPO price range failed to reach the valuation company garnered in private funding. This might be caused by the general cooling of IPOs over the past few months.

Going public in a dynamic market like RPA is tricky. However, UiPath has demonstrated strong performance and growth potential and this should be an extremely successful IPO only cementing its leadership position. We forecast a strong performance and growth for the share and recommend a long-term positive outlook. 

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This article has been co-authored by Khubaib Abdullah and Ayush Dugar, who are in the Research and Insights team of Torre Capital.

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Reinventing meat and cultivated proteins: Gauging the investor’s interest through sustainable investment products

by Sandeep Kumar

Keep up to date with the latest research

Overview and Evolution

The popularity of alternative meat products from Beyond Meat (NASDAQ: BYND) and others, as well as early regulatory permission for some cultured meat products, has sparked a flurry of investment in this nascent business.

Despite this enthusiasm, the business is still in its early stages and is mostly pre-revenue, with a number of growth obstacles ahead, including the need for clear legal frameworks, more economically viable products, and scalable technologies. As the traditional cattle industry tries to defend its market share from produced protein sources, providers will almost certainly encounter greater lobbying attempts.

Even while widespread adoption may be several years away, improving consumer sentiment, together with increased demand for more sustainable food choices, will undoubtedly boost investment in grown protein products.

The key industry drivers for alternative meat products industry

· Antibiotics and hormones-free: Industrial farming conditions can be unsanitary, resulting in sick animals who are frequently treated with antibiotics. Hormone injections can also help to promote muscular growth or, in the case of dairy, milk production. These therapies may have an impact on human health, such as the transmission of animal hormones to people or the development of antibiotic-resistant bacterium strains. Cultivated proteins are made in sterile conditions without the use of antibiotics or hormone therapies.

· Free of zoonotic diseases: Zoonotic diseases, such as COVID-19, can be transferred to humans through animal meat intake. Because it is produced in a controlled, sterile setting, cultivated beef is deemed safe from this risk.

· Ability to design and change nutrient profiles: Cultured meat manufacturers can change inputs to generate products with better nutritional value, such as proteins, amino acid composition, vitamins, and minerals.

· Food security: Cultivated proteins offer a potentially large new food source that isn’t constrained by livestock’s significant land, water, and food requirements. This is especially essential in light of expected worldwide population growth and corresponding food demand.

· Environmental advantages: Some people believe that produced protein is a better option for the environment than conventional animal production. According to a 2011 study conducted by the University of Oxford and the University of Amsterdam, cultured meat may be produced with only 4% of the greenhouse gas emissions (GHGs) and 2% of the area required for conventional meat production, while requiring 45 percent less energy. 16 Critics have noted, however, that the energy required to create grown meat may originate from fossil fuels, resulting in worse environmental repercussions than animal agriculture in some ways.

 Ethical ramifications: Some consumers, such as vegans, avoid eating meat because of animal welfare concerns. Because no animals are injured in the manufacturing of cultivated meat, it is considered an ethical advance.

The environmental and ethical advantages of cultivated meat are based on a one-to-one substitution for traditional meat. On the other hand, a single cow can provide hundreds of distinct products. For example, if cultured beef totally replaced conventional ground beef, demand for steak, leather, gelatin, and steric acid would remain unchanged, meaning that cattle demand would remain steady, albeit ground beef demand might shift to new markets.

Competitive Landscape and Market Mapping

Source: PitchBook

Investors’ Trust Growing with Market

Compared to the initial years when alternative meat was first introduced to recent years, the market has witnessed steady growth in VC funding from a single $25 Mn deal in 2012 to a total of $303 Mn invested across over 30 deals in 2020. While the annual deal count has nearly tripled in 2018, the average deal size decreased. However, it is expected that the fundings will increase in tandem with the growth in the industry. The first five months of 2021 have seen a surge in investment with over $772 Mn recorded. With this pace, it is expected that the funding activity will triple this year, as compared to 2020.

Source: Pitchbook

Investment trends suggest that the cultivated protein providers have received the largest share of VC funding. Those among the top recipients include UPSIDE Foods, Eat Just, and Modern Meadow. Each of them have received more than $100 Mn funding, individually. Besides receiving funds from VCs, cultivated meat producers have also started to gain trust of investors like impact investors such as AiiM Partners, impact angel investors including Richard Branson, and even large corporations such as Cargill, Tyson, etc. These large companies have started to realise the importance of the alternative meat and are engaging through strategic investments.

How are Incumbents Reacting to the New Alternative Meat Market?

Combining the benefits of plant-based proteins along with cultivated proteins have proven to have cost and scale efficiencies, without leaving a significant impact on nature. Apart from health benefits like low cholesterol and with a taste similar to real meat, the alternative meat sales reached over $1.4 Bn in 2020. This growth in demand justifies why the existing food companies are venturing into this domain.

Based on location, Singapore is emerging as a hub for cultivated meat and is attracting many companies primarily due to ease of access to funds and required talent, attractive regulatory environment and significant market opportunities in South-East Asia. Companies like Avant Meats, Shiok Meats, Aleph Farms, etc. are considering to set up production units in Singapore.

Challenges Faced by the Culture Protein Production

The alternative meat market is yet to realise its full potential. Despite its wide range of benefits, there are certain roadblocks that are restricting the fast growth of the market. The Cultured protein market has three stages of production — developmental scale, pilot sale, and commercial scale. Most companies are yet to access the commercial scale. Once it is able to attain commercialization scale, plant-based meat will be available at a cheaper price compared to traditional options. It is estimated that cultured protein would be 5x cheaper by the start of next decade.

Currently, these options are not widely available to the customers and still require further advances in R&D processes to ensure the growth of the sector. Food Tech startups are continuously evolving to generate cost-efficient alternative meat. It requires huge amounts of investments and specialised workforce to experiment with different techniques from the use of AI, to bioprocessing and 3D bioprinting. This can be taken care of through greater funding from investors. The median funding for early stage VC rounds in cultivated meat startups have gone up from $4 Mn to $9.5 Mn in the last three years. Companies are trying their best to make the alternative meat very close to the traditional meat in taste and texture so that they are able to fully replace the animal meat in the coming years.

A Nascent Industry with Great Potential

Environmental concerns with the regular meat industry, change in food preferences, health benefits, cost efficiencies are some reasons that are facilitating the growth of the alternative meat market. It is estimated that the market for cultivated food, including meat, seafood, dairy, eggs, etc., would reach close to $18 Bn by the year 2035, with a consumption of about 6 million metric tons. While this may be just 1% of the total protein consumption in the future, the market may witness high growth.

Currently, a huge part of the alternative protein production goes into research and development. However, as the market enters commercialisation scale, costs will come down. Studies suggest that by 2035, cell-based and plant-based meat alternatives will be 10x cheaper than the traditional animal products, and will allow families to save over $1200 in food costs. It is also expected that by next decade, companies’ revenue will also increase 100x for plant-based meat.

Although the overall consumption of plant-based meat is currently very less, the market shows no sign of slowing down. The sector is still in its nascent stage and companies can gain from grabbing the opportunities early, which would be possible only through sufficient funding support from investors.

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This article has been co-authored by Sargam Palod and Tamanna Kapur, who is in the Research and Insights team of Torre Capital.

Why the crypto industry needs regulation and will it then become safer?

by Sandeep Kumar

Keep up to date with the latest research


Money or the currency system has evolved itself over the years. One such system that is raging these days is cryptocurrency. Cryptocurrency is basically a virtual currency that is generated and secured through cryptography, making it almost impossible to counterfeit. While the idea of such currency started to establish in the late 1990s, the first actual cryptocurrency came into existence in 2009 with the creation of Bitcoin. Presently, the global cryptocurrency market has hit the $2 Tn mark as of August 2021, and the market is only growing with more awareness and acceptability.

Features that make Cryptocurrency Unique

What makes cryptocurrency unique are its fundamental features. Let us have a look at these, before we understand the crypto market.

 Security — Cryptocurrencies are secured as they consist of cryptography codes. Each owner has a unique set of encrypted codes which are difficult to replicate. The blockchain technology ensures the integrity of transactional data and is an essential part of the system.

 Decentralised — It is not controlled by any central authority. This feature makes crypto immune to the old ways of government control and interference. The system of blockchain record-keeping maintains transaction records and keeps the network transparent.

 Irreversible Transactions — One has to be cautious before initiating crypto transactions as they are irreversible. Once the permission is granted, the transaction will be carried out completely. And due to lack of regulation, no organisation will be able to help in case of wrongly initiated transactions.

 Limited Supply — There are fixed, predefined amounts of cryptocurrency that can be mined. While some miners release a proportion of total supply to ensure price stability, others release all coins at once. With limited supply, the demand for each crypto determines its price. Hence, it can be quite volatile in terms of pricing.

Apart from the above features, Crypto transactions can be processed super-fast, and do not require any physical location, making it easy to use for the people.

Cryptocurrencies that are Leading the Market

Source: Statista

From just 66 crypto-coins, to more than 6000 in 2021, the growing popularity and advancement in technology has led to growth of several currencies. Out of vast number of options available, the following are leading the market presently:

 Bitcoin (BTC) — The first cryptocurrency created in 2009, by the pseudonym Satoshi Nakamoto, Bitcoin is the largest cryptocurrency in the world. With a market capitalisation of over $856 Bn, it has witnessed a growth of about 8900% in its price in the last five years.

 Ethereum (ETH) — With a market capitalisation of over $357 Bn, Ethereum is one of the biggest cryptocurrency. It is popular among users particularly due to its usability in crypto-goods and non-fungible tokens (NFT). Launched in 2015, Ethereum has seen a significant growth of over 27000% in the last five years.

 Binance Coin (BNB) — Founded in 2017, Binance Coin currently has a market capitalisation of over $70 Bn. It can be easily used to trade and pay fees on Binance platform which is one of the largest crypto exchange platform in the world. Since its inception, BNB’s price has risen by whooping 419000%.

 Tether (USDT)  Tether is a stable coin with a market capitalisation of over $64 Bn. It is the most consistent crypto-coin as it pegs its value to fiat currency like the US dollar.

Source: statisticsanddata.org

Acceptance Around the World

While most people buy cryptocurrencies to gain from price volatility through speculative investments, they have already started to gain recognition as a payment option in many companies across the world. From big firms like Microsoft, CocaCola, BMW to small businesses and even gig workers, across different industries have already started to accept crypto payments. In case of global companies, transacting in cryptocurrencies serves as an added advantage as they are able to dodge additional 2–3% cost they have to incur while making international payments. However, most businesses are dependent on crypto-exchanges that convert crypto payments into fiat currency, which then goes to the receiving party. Tesla’s announcement of accepting Bitcoin as a direct payment option is considered to be a big move in the favour of crypto acceptability. Such instances rally up the prices of the particular crypto coins.

To make crypto payments more accessible, Bitcoin ATMs have been installed at various places. The United States has the highest number of such ATMs. Compared with the rest of the world, the USA has the most number of businesses accepting crypto payments. In June 2021, El Salvador became the first country to accept Bitcoin as the legal tender. Athena Bitcoin, a provider of crypto ATMs, is investing over $1 Mn to install about 1,500 crypto-ATMs in the country. Such moves indicate the growing acceptability to the new form of currency system around the world.

Dark Side of Cryptocurrencies

Decentralisation is the most important feature of cryptocurrency. There is no official organisation that keeps a record of cryptocurrency. While this provides immunity from government interference, this feature has also led to some negative consequences. Due to lack of regulation and anonymity of transactions, it is used for dark activities and frauds. While the blockchain technology makes it difficult for third parties to access transactions, some hackers may be able to crack the code. Recent times have seen an increase in the number of such thefts. From $4.5 Bn worth of theft in 2019 to $1.7 Bn worth of theft in 2020, the value of crime has decreased but the number of crypto theft jumped by 40% YoY. In August 2021, hackers carried out the biggest ever theft of over $600 Mn in digital coins from token-swapping platform Poly Network, of which hackers returned about half of the amount within a couple of days. This shows the vulnerable side of digital currencies.

Changing Regulatory Scenario

Despite the negative consequences, several countries have started to realise the potential of digital currencies. As a result, governments and organisations are working towards changing the policy scenario to make the crypto market a better place.

The US Securities and Exchange Commission (SEC) puts cryptocurrencies under the securities category, on which security laws are very much applicable. The US is even considering strengthening crypto tax measures that will be beneficial for the government as well. On the other hand, China is trying to tighten crypto activities, primarily through crypto mining regulations. While the regulatory scenario across the world is still in its nascent stage, it is believed that clear regulatory norms would remove significant roadblocks for cryptocurrency.

Divided View on Cryptos — What does its future look like?

There is no doubt that the crypto market has seen significant growth since its birth. It has seen widespread growth in its adoption in various firms-big or small, across the world. And when big names like Elon Musk favour such digital currencies, it immediately rallies its prices to a new high. However, there is a divided view about cryptos among big investors. While it is gaining popularity, some of the big investors in the world, including Warren Buffett are against the idea of crypto, deeming it to be risky and worthless, primarily due to its distinctive features.

But at the same time, with the growth of blockchain technology, governments and organisations have started to realise its importance. Several governments have already started working on creating and amending policies regarding digital currencies that would make it a safer option for investors and will also curb the demerits associated with crypto.

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This article has been co-authored by , who is in the Research and Insights team of Torre Capital.

How increased acceptability towards EdTech platforms is changing the long-standing traditional education industry?

by Sandeep Kumar

Keep up to date with the latest research

Edtech market landscape and growth in the short run of pandemic

Edtech abbreviation for Education Technology is the combination of IT tools and educational practices aimed at facilitating and enhancing learning. Edtech encompasses not only the hardware and software program but also the learning theories and the most effective ways to teach people. Edtech solutions are being increasingly adopted as it offers numerous advantages. A majority of educators believe that each student learns at their own pace, a few major benefits that Edtech offers students are the accessibility of resources to learn from and flexibility to train at their individual pace. Another advantage is the comparatively lower cost which makes it more affordable for anyone to expand their knowledge.

Globally the market opportunities amount to $227 Bn and likely to reach $404 Bn by 2025 growing at a CAGR of 16.3%. The global Edtech venture capital funding in 2019 was around $7 Bn, in 2020 this amount increased more than doubled and reached $16.1 Bn! The booming sectors of Edtech are

· K-12 education

· Post-secondary education

· Corporate training

K-12 is the largest segment of the market; however, the highest funding received was by skill development startups. This signifies that the rise of Edtech startups has created awareness for skill development and not just graduation for a successful career.


· Key Players: Byju’s, Yuanfudao, Zuoyebang, VIPKId, Articulate, Udemy. etc.

· Market Size: $227 Bn

· CAGR: 16.3%

· Average Valuation of top 10: $6.49 Bn

Edtech market size ($ Bn)

Source: Holon IQ

The rapid change in industry dynamics post-covid

The pandemic resulted in shutdowns of physical classrooms, globally, over 1.2 billion children are out of the classroom. To tackle this education changed drastically with the rise of e-learning and remote teaching. Prior to the pandemic, the EdTech sector was growing but at a relatively slower rate as online education was still met with some resistance. The lockdown and fear of COVID-19 spread have taken schools, colleges, and educational institutes online, thus leading to the emergence of many EdTech products and services and a rise in adoption. Though in its nascent stage, there has been a significant transformation in curriculum development and pedagogy where we have moved from thinking digital to being digital.

Drivers of growth

The increasing penetration of mobile devices, easy accessibility to fast internet, and the impact of the pandemic and growing online teaching-learning models to keep running the education system are majorly driving the growth. The presence of interactive and immersive learning can impact several as it increases the level of interaction. Educators are also increasingly adopting newer technologies like AI, virtual reality, and gamification.

Edtech development over the past made the educators doubtful about the impact of technology on improving the outcomes of students. It also created suspicion about overreliance on smart devices. However, the situation is now changing with schools investing more in the attempt to integrate new technology into traditionally delicate educational structures. Employers are also investing in such skills with a focus on leadership and management and creative problem-solving.

China and India are the biggest markets for education in the world. The Asian region has always shown lower-income elasticity for education relative to other sectors. Moreover rising access to digital tools and increasing government initiatives in India and China has further emphasized the importance of education.

VC Deal Size

Source: Pitchbook

Segment-wise market mapping and major players

The ed-tech industry, generally segmented into the Pre-School, K-12, and Higher Education sectors have continued to evolve over the years.

With digital learning, the preschool segment is expected to witness the fastest CAGR from 2021–2028. The global early education market is expected to reach $480 Bn by 2026. Implementation of technology in this segment will enable educators to use applications to maintain records of the students in a much more efficient way, as well as help curate interactive games, storybooks, and other content for early childhood learning. Companies like Makeblock, Tinker Garten, Flintobox, etc., provide interactive activity-based learning for young minds.

The major share is captured by the K-12 sector, with a share of about 41% as of 2020. There are great developments in the education system across the globe that supports experiential learning which is enabled with the help of gamification and AI-based technology. While the use of technology such as interactive whiteboards, learning management systems had already started to gain acceptance before the Covid-19 pandemic era, more focus is shifted towards software that provide O2O tutoring, virtual field trips, interactive lab experiments, etc. Key players in the K-12 segment are BYJU’S, K12 Inc., Kahoot, Khan Academy, Chegg, Quizlet among others.

The global higher education market is expected to grow at a CAGR of 10.2% from 2019–2027. With university and college fees soaring, people are relying more on edtech platforms for e-learning, college or career preparations, and even financial assistance. Professionals in the modern world are constantly required to constantly upskill themselves to match with the evolving job opportunities. Thanks to MOOC platforms, one can now have access to the world’s top university courses, sitting at home. Major edtechs like Coursera, upGrad Education, Udemy, Skillsoft, DataCamp, etc. make learning an easy and affordable process for young aspirants and professionals.

Innovations and new technologies leading to a colossal $404 billion market in the future

Implementation of the latest technology contributes significantly to the growth of the edtech industry.

Valuation multiples for the global edtech space

Global peer comparision and their EV/Revenue Multiple

Edtech sector provides a lucrative investment opportunity with high growth prospects, but as evident by the peer comparison as the company grows the market saturates as most of the available opportunities have already been captured. We are cautiously optimistic about entering into the market as later into the life cycle of the business chances of above-par returns will be sleek.

The edtech conundrum: necessity or costly?

Online courses and programs offer cheaper options for learning than traditional education options. According to reports, a degree course in a traditional university or college costs a total average of $85,000. On the flip side, an online degree costs $30,000. This means enrolling for a course online offers students the opportunity to save more tuition fees and boot camps while enjoying greater flexibility. However, that doesn’t mean that the traditional method is not all bad; they offer tangible learning and study experience and access to university resources.

In our opinion both methods have several offerings and calling on better than the other won’t be right as both have their pros and cons. This brings us to the inevitable, that integration of both the methods is the way going forward.

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This article has been co-authored by Ayush Dugar and Tamanna Kapur, who is in the Research and Insights team of Torre Capital.

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