Indonesian edtech players bet big on the future of distance learning

Photo by Jeswin Thomas on Unsplash

Startups operating in the burgeoning edtech sector in Indonesia are betting big on the future of distance learning despite indications that the boost they received during the pandemic may wane.

“Going forward, we see there will be no difference between digital learning and offline learning,” Tomy Yunus, co-founder and CEO at Cakap told DealStreetAsia.

“Campus, school buildings will be filled but it will be an alternative or an option in the learning activity. Everything will be supported, empowered by digital learning or learning management system,” he said.

Cakap, which provides online live language lessons with native-speaking teachers, allows students to study at their preferred time.

The company made headlines late last year when it raised $3 million in its Series A+ round led by Singapore-headquartered Heritas Capital in December.

Cakap also offers vocational lessons, adds embedded AR technology to increase children’s engagement in the classroom, and trains teachers.

In terms of the target market, the edtech sector in Indonesia could be divided into several categories, the one that caters to K-12 students, tertiary students, lifelong learners, and corporate trainees. Prominent players in the country focus on the K-12 students including RuangGuru, Zenius, and CoLearn. Other players such as Pintar—formerly known as HarukaEDU—focus on tertiary students and corporate trainees.

There are also financial technology companies with a focus on the education sector such as Pintek.

“Hybrid [learning], I think, will be applied more. We have funded schools that made savings because of that. Their operational costs became lighter with hybrid system,” said Tommy Yuwono, co-founder and CEO at Pintek.

Crosshead: Pandemic boost

The COVID-19 pandemic has been a “blessing in disguise” for edtech players, Cakap’s Yunus said.

Even as Cakap did not disclose its financials in detail, Yunus said that the company has been EBITDA-positive since 2020 and has recorded a 500% growth in the number of its active students between January and June 2021, compared to a year-ago period.

Indeed, edtech companies across Asia showed impressive growth in terms of student acquisition, funding, and valuation during the pandemic, Kristine Lau, an analyst at investment research company Third Bridge, noted.

According to DealStreetAsia Data Vantage, edtech firms in Southeast Asia raised a total of $39.2 million in the first quarter of 2021. That is almost three-quarters of the $54 million funds raised in 2020 during the peak of the pandemic with schools, colleges, and universities being closed.

Expand Table

CompanyDescriptionTotal fundingLatest funding roundStageInvestors
CakapLanguage learning platform, connecting students with teachers via video call$3 millionDec 23, 2020Series AHeritas Capital, Prasetia Dwidharma, Strategic Year Holdings, InvestIdea Ventures
CoLearnEmpowers tuition centres and tutors to create online learning experiences for their students$10 millionApril 20, 2021Series AGSV Ventures, Alpha Wave Incubation, TNB Aura, Surge, AC Ventures, Alter Global, Taurus Ventures, S7V, Leo Capital India, January Capital
GoKampusMobile app that allows students to apply for local and international universitiesundisclosedJune 3, 2021SeedSovereign Capital, Salt Ventures
GreduPlatform that aims to increase the level of engagement in a school environment to improve the overall schooling experience for teachers, parents, and students$4 millionJuly 7, 2021Series AIntudo Ventures, Vertex Ventures
Hactiv8Coding boot camp in Indonesia that turns absolute beginners into job-ready developers$3 millionJan 15, 2020SeedEverHaüs, Sovereign's Capital, Prasetia Dwidharma, Convergence Ventures, Skystar Capital, RMKB Ventures, East Ventures, SMDV
HarukaEDUOffers solutions for universities, corporates, and individual students for online learning$2.2 millionNovember 18, 2019Series CSusquehanna International Group (SIG), AppWorks, Gunung Sewu Group, GDP Venture, Pearson Affordable Learning Fund (PALF), CyberAgent Capital, Samator
PahamifyContent learning for senior high schools to university students$150,000Nov 27, 2020Series AWah Hin & Co., Insignia Ventures Partners, Shunwei Capital, Y Combinator
PintekFintech platform for education loan financing$21.3 millionJan 11, 2021Seed, debt financing in JanuaryAccial Capital, Finch Capital, Accion Venture Lab, Global Founders Capital
QuipperOffers quiz-based e-learning in apps for iPhone and Android platforms$10.1 millionMarch 6, 2014Series AGlobis Capital Partners, Atomico, Benesse
RuangguruStarted as an online marketplace for tutors, then evolved to offer its own learning management system, learning video subscriptions, and online exam simulations to K-12 students$205.1 millionApril 16, 2021Series CGGV Capital, Tiger Global Management, EV Growth, General Atlantic, UOB Venture, East Ventures, Alto partners Multi-Family Office
ZeniusSelf-learning materials for K-12 students$20 millionJan 7, 2021Series BKinesys Group, Alpha JWC Ventures, BEENEXT, Northstar Group, Openspace Ventures, Alto Partners Multi-Family Office

However, a key question playing on everyone’s mind is about the relevance of the sector post-pandemic.

According to Lau, some of the edtech business models may lose their seen over the next 12 months as schools reopen.

“I think just overall, the investor community and edtech professionals, in general, should be more cautious about a segment that potentially could be most impacted,” she said.

Indonesia, which reported the world’s highest number of COVID-19 cases earlier this year, is gradually coming back to normalcy. On Friday, the country reported more than 1,300 new cases, more than 97% lower than its highest on July 15, according to data from the government’s COVID-19 special task force.

In August, schools in the country started to reopen, amidst a push from the World Health Organization (WHO) and the United Nations children’s agency UNICEF to open schools safely for children. International organisations believe a prolonged school closure can have an adverse impact on students’ learning progress, health, and well-being at critical development stages.

“Will any content or service be delivered online, I think it still will, especially for those who have difficulty accessing higher education or opportunity in the workplace,” said Ray Pulungan, the newly-appointed CEO at Pintar, on the future of the edtech sector post-pandemic.

Pintar is backed by investors such as US-based trading firm SIG and Taiwanese VC AppWorks. Following a management change recently as reported by DealStreetAsia earlier this month, the company will adjust its business model and potentially offer student loan.

Road ahead

According to a 2020 World Bank report on Indonesian edtech industry, investors see a huge market potential in the country’s edtech sector – especially in locally-proven business models that can create a balance between social impact and profitability.

“There was consensus that once a model proved profitable at scale, investments would flood into the edtech sector in Indonesia,” the report stated.

Chik Wai Chiew, CEO and executive director at Heritas Capital, said he is closely monitoring the sector as it could stare at a ‘problem of plenty’ going forward, in terms of too many investments coming in and inflated valuations. This, he said, has not happened yet.

Cakap’s backer Heritas Capital has been focused on investing in healthcare but it wants to pump in more capital into edtech in a bid to provide better access to quality education at affordable prices by leveraging technology.

While there is a slew of edtech firms in the archipelago since 2012, the sector has not seen much growth and most firms are still at their seed or pre-Series A stage of investment, barring a few such as Ruangguru, Zenius, and Pintar. While Ruangguru raised $150 million in its Series C round, Zenius just bagged an undisclosed pre-series B funding at the start of this year, and Pintar raised undisclosed amount in its Series C funding round in 2019.

“They have different leadership styles, different strategies but they’ll all head towards inorganic growth in the next three or four years,” said Sandeep Aneja, founder and managing partner at private equity firm Kaizenvest.

Industry observers note that Indonesia differs from markets such as China, India, Singapore, and Vietnam where intense focus on academic performance and pressure on students drive a booming after-school industry.

“But there are pockets of Indonesia, which are more tech-ready because the country is more tech-savvy than Vietnam,” added Aneja.

He believes there will be a clutch of venture-backed startups that will lead the Indonesian edtech market over the next 3-4 years, growing by acquisitions.

Funding, going forward, is expected to gain steam as global investors could ramp up their focus on Southeast Asia after China came down heavily on the country’s private education sector, thereby banning private companies from teaching the school syllabus during weekends.

Cakap’s Tomy Yunus said it could be an opportunity for Indonesian edtech companies to collaborate and partner up with foreign companies that are diverting their focus on Chinese edtech industry.

“Hopefully, more capital is finding their new home,” he said.

Meanwhile, William Gozali, chief investment officer at BRI Ventures said funding coming in from overseas investors may not be as easy as education is considered a “hyperlocal” sector. Even as foreign investors can offer generous valuation, they may not be able to offer value-added like the local VCs who have a thorough understanding of the market and local curriculum, he added.

Michelle Teo and Cindy Silviana contributed to the story.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.