Significant funding pumped into educational startups

May 04, 2023 | 13:00
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Despite forecasts that the global economic situation may negatively impact the startup market, the edtech sector in Vietnam is still flourishing due to increased investment in education, affordable internet costs, and advancements in industry technologies.

Edtech startup MindX, which provides technology education for all ages and guarantees job placement, on April 12 successfully raised $15 million in a Series B funding round led by Singapore’s Kaizenvest investment fund. Other investors in this round include Thailand’s Aksorn education group, Japan’s Mynavi recruitment company, and Wavemaker Partners, which led the Series A funding round of MindX.

Significant funding pumped into educational startups
There are strong signs that online learning can fit future development plans, photo Le Toan

This investment round comes only a year after the Series A round, which raised nearly $3 million. MindX has since expanded to 32 locations across Vietnam and offers a wide range of technology courses, including blockchain programming, data analysis, software testing, and more. Founded in 2015, this startup has graduated over 35,000 students who are now living and working in nearly 20 countries around the world.

“We believe this investment fits within the future of learning themes and is a testament to our confidence in the growing demand for technology courses across Southeast Asia,” said Sandeep Aneja, founder and managing partner of Kaizenvest.

On April 4, Prep, an e-learning platform specialising in standardised language test preparation, also raised $1 million in seed funding co-led by East Ventures and Cercano Management. The doubles Prep’s total funds raised after $1 million was received from Touchstone Partners last year. “The new funding will help accelerate product development and increase adoption in the market,” the company stated.

Founded in 2020, Prep aims to make quality test preparation for the IELTS, TOEIC, and Vietnam’s high school graduation exam accessible to everyone. The platform also plans to offer courses for other standardised tests such as JLPT for Japanese, HSK for Chinese, and TOPIK for South Korean.

Also in April, DTP Education Solutions received significant investment from Japanese education corporation Gakken Holdings. As a result of the investment, Gakken now owns 35 per cent in DTP, making it the largest shareholder of the publisher.

According to Nikkei Asia, Gakken views Vietnam as a strategic location for expanding its presence in the Southeast Asian market. With Japan experiencing a declining birth rate that threatens the company’s position in the domestic market, Gakken aims to leverage this investment to expand its textbook and workbook business in Vietnam and the broader Southeast Asian region.

The company has set a target of increasing overseas sales to 30 per cent by 2030, up from less than 5 per cent currently. As part of the deal, Gakken will also assist DTP in producing textbooks and workbooks for subjects beyond English, including maths and science.

According to Nguyen Tri Hien, chairman of Edtech Agency and co-head of the Education Technology Village at Techfest Vietnam, Vietnam’s edtech market is expected to receive significant support in the future.

“Vietnam is in the top 10 fastest growing online education markets globally, with a compound annual growth rate of 44.3 per cent and is expected to reach a value of $3 billion by the end of 2023,” Hien said.

In recent years, Vietnam has been assessed as the country with the highest level of expenditure on education and training in the world. According to Bain & Company’s e-Conomy 2022 report, the average Vietnamese family spends about 20 per cent of their income on investment in their children’s education, while this rate in Southeast Asian countries is 6-15 per cent.

Additionally, according to Germany’s market and consumer data provider Statista, the population share with internet access in Vietnam is estimated at over 75 per cent in 2023, and is forecasted to continuously increase between now and 2028, facilitating the growth of edtech.

“The cost of the internet also plays an important role in the growth of edtech in the region. This is a good sign for online learning in terms of affordability,” Hien assessed.

In July 2021, the Vietnamese government set a target to expand online training to 90 per cent of universities and 80 per cent of high schools and vocational training institutions by 2030. As Vietnam seeks to improve the quality of its workforce, particularly in digital skills training, experts believe that there is still significant potential for growth in educational technology.

However, amidst a funding crisis, investors are tightening their wallets, and many Asian educational unicorns, including Unacademy and BYJU’s in India, are cutting jobs and delaying expansion. The situation in Vietnam is no different, with investors losing interest and startups finding it increasingly difficult to raise capital, especially during the growth phase. The competitive edtech market in Vietnam means that startups must compete at all costs.

According to a representative of Nextrans investment fund, customer acquisition is becoming increasingly expensive and time-consuming for both new and established edtech startups targeting the K-12 segment. Therefore, such startups need to have a clear goal and strategy to overcome this challenge.

Ton Quang Cuong, dean of the Faculty of Education Technology at the University of Education under Hanoi National University, noted that most of Vietnam’s edtech companies lack breakthrough technologies and need to adopt advanced technologies to remain competitive. He emphasised the importance of combining content and technology flexibly to keep learners engaged and motivated.

“Investors in Vietnam’s edtech industry are cautious, and startups need to focus on developing unique technologies, as well as clear goals and strategies to succeed. Additionally, high-quality content combined with the right technology is crucial to engage learners and keep them interested,” Cuong said.

According to Nextrans, Vietnamese education technology startups secured eight investments worth a combined $46.8 million in 2022. Although this amount is lower than the peak of 2021, which saw $158 million invested, it still represents an increase from 2019-2020.

Notably, while the majority of investment in 2021 came from two deals in later-stage startups (EQuest’s $100 million and Elsa’s $15 million), capital flows in 2022 have been directed towards emerging startups such as Edupia, Marathon, Vuihoc, and Azota.

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