Funding new EdTech ventures to support employment and reskilling
Omidyar Network India is an investment fund focused on social impact. It invests in bold entrepreneurs who help create a meaningful life for every Indian, especially the hundreds of millions of Indians in low-income and lower-middle-income populations, ranging from the poorest among us to the existing middle class. To drive empowerment and social impact at scale, we work with entrepreneurs in the private, nonprofit and public sectors, who are tackling India’s hardest and most chronic problems. We make equity investments in early stage enterprises and provide grants to nonprofits in the areas of Digital Society, Education, Emerging Tech, Financial Inclusion, Governance & Citizen Engagement, and Property Rights. Omidyar Network India is part of The Omidyar Group, a diverse collection of companies, organizations and initiatives, supported by philanthropists Pam and Pierre Omidyar, founder of eBay.
How can EdTech play a role in upskilling and also making vocational education more accessible?
Sarvesh: Let’s start with the blue collar side, which includes technical vocations. Here, accessibility is not much of an issue for those looking to upskill, as there are several government programs that sponsor these courses for free. The issue for vocational centers post-pandemic will be that they're not prepared for teaching online. There’s also the other issue of what do you do when there is a need for physical presence? What we need to ask, going forward, is ‘How do you make it blended?’ There are some parts of learning which you can do online and this makes the whole system more efficient. But, this is a shift that hasn't happened, as of now. Funding support is needed for the organizations working on the ground to implement tech solutions and convert part of their physical-only programs to blended online programs. For example, we have worked with Anudip Foundation in bringing their pedagogy online by funding their tech stack development work.
In areas like sales, logistics, and digital marketing, we’re seeing platforms that are acting as placement agencies and helping generate demand for skilled individuals. An interesting trend is that they're not just helping place jobseekers, but they're also focusing on up-skilling. So, they’re becoming lifelong learning platforms.
On the white collar side, roles in high-tech engineering and software development for instance, the focus is completely on online education. But interestingly, the target segment for these are graduates who have finished their course but are still unemployed.
How do tools and new models that you support help to empower workers, especially at the base of the pyramid?
Siddharth: Most recently, we supported the Ministry of Skill Development & Entrepreneurship (MSDE) in India, to help build a digital blueprint for its regulatory body and for electronic credentialing. On the corporate investment side, we should be announcing shortly an investment in a company which trains students who went to college, but didn't get jobs which are commensurate with their level of education. So we are funding a for-profit entity which will train people entirely remotely and guarantee placements for them. Their model is – if we don't place you, you don't need to pay us. To ensure placements, they reach out to a bunch of employers to understand their needs. Then, they try to tailor their courses accordingly.
We’re also supporting innovations in terms of financing. SMEs were most negatively affected by unemployment, and that led to people potentially slipping below the poverty line. We came up with the idea: Can we use returnable grants? There are people who've been impacted as a result of Covid-19 and a temporary infusion of capital would allow them to get their lives back on track in terms of either upskilling themselves or working capital that allows them to get back to work. Maybe the recipients will be comfortable saying: “I have benefited. I will give that money back to you when I can, and then you can use it again.” That’s something that we focused on with other like-minded funders and launched this blended finance facility called REVIVE in mid-2020. The initial amount was a couple of million dollars put together across two or three organisations, but the idea has now scaled touching over 15 million dollars in the last few months. And already we can see almost 40,000 lives being impacted. If returnable grants work, this becomes pretty interesting for the entire corporate giving cycle space as multiplier on the money you could tap into.
On the financing side, we have also invested in a student financing company Credenc. They are creating a new lending model whereby a student’s loan application is evaluated basis their potential employability as opposed to current credit worthiness. This helps students from middle and low income population to pay the fees, get access to high quality skilling / degree programs, which ultimately helps them get a job / improve their income levels.
How do you address the digital divide in terms of those who are underemployed, but can't access the internet reliably to do their training?
Sarvesh: First, online learning requires at the minimum, a smartphone and internet connectivity. This challenge has been overcome quite rapidly in the past few years. Also, some organizations are working on the ground to provide digital infrastructure to provide access. As an example, one of our portfolio companies, i2e1, is enabling retailers to become a Public Data Office (PDO) under the recent PM-Wani initiative. This allows the area residents of the retailer to access high-speed internet at low costs.
Notwithstanding, while smartphone penetration is increasing, this is not enough. Even with folks who have access to that infrastructure, how do you bring them into the online learning landscape? We are seeing start-ups with online learning and skilling solutions for this segment, actively working on distribution efforts to get these users to start learning digitally. Once they start finding value, more and more individuals should use it.
Some of our portfolio companies like DoubtNut and Vedantu have made K-12 online learning more accessible by making their application mobile friendly and reducing the cost of bandwidth required to run the application. We expect more companies to follow suit in the blue collar skilling space.
Have you identified shortages in certain sectors?
Sarvesh: Yes. We've seen trends that are increasing the demand for health care workers. The other sector that has picked up significantly in the aftermath of Covid-19 is e-commerce. This relates to delivery executives across the whole value chain. Also, with field sales moving online, that again has driven demand for tele-sales executives. So, now you need people who can actually nurture and close leads over the phone as opposed to meeting in person and this requires different skill sets. A lot of the systemic interventions that we've worked on will help training organizations that are working on the ground, upskilling these individuals.
Additionally, the new training placement kind of model that we spoke about, is focusing on bridging the supply demand gap in technology. Tech adoption has picked up significantly across sectors, driving the demand for software engineers. Also, given the surge in online learning across segments, there is a strong growth in demand for such teachers. One of our portfolio companies CENTA is a teacher focused platform. It certifies, trains and provides career opportunities to teachers across the eco-system including high-growth EdTech companies.
As an investor, what do you look for in EdTech companies?
Sarvesh: For any tech company the focus is on outcomes. Depending on which segment you're catering to, or which kind of learners are on the platform, the outcome definition will vary. We look for teams that have laser sharp focus on outcomes, and then there are several inputs that go along with it. For example, do you have a quality curriculum? Do you have a student that is engaged?
Siddharth: The focus of the entrepreneur on improving outcomes is a mindset that is super important in the education space. And the final point is whether we are providing better outcomes at a significantly more affordable price than whatever else is out there in the market. So when these things check out, then it becomes something that we get excited about.