Our investment in Classplus
and our SME-led distribution thesis
We recently announced our investment into Classplus in India. The company is an interesting SaaS + Platform play in the education tech market, so I decided to write about our thesis here.
For the last 5 years, we have been busy falling in love with influencer-led-distribution models in emerging markets, especially those leveraging the SMEs. Having invested in direct to consumer companies such as Bukalapak, Flyrobe, and BerryBenka, as well as influencer/reseller-led distribution companies such as Kudo and Vouch, we have seen first-hand the intense scalability and cost effectiveness of the latter in developing markets. The simple reason for this is the Trust deficit in the customer.
As a result of this observation, we have been taking an influencer-led approach on distribution for each vertical that we are investing in. If you step back, this will seem intuitive. The “influencer” has an existing ready base of “followers” for potential “purchase”. The “influencer” also enjoys unique trust from the followers to make the “purchase” happen. What is key is that the influencer’s “interests” are well aligned with the overall business of the company aggregating these influencers.
Applying this thesis of influencer-led-distribution model to Education sector you can obviously conclude that the Teacher is the “Influencer”, Student is the “Follower”, and the Learning Content throughout the journey of the Teacher-Student relationship is the “Purchase” decision. The tutor of a student not only commands control over the content being taught by herself, but also influences strategic decisions all the way from “Which tests to prepare from?” to “Which college to enrol in?”. The influence is further heightened in India by the prevalent culture of “Guru is God” engrained in the Indian psyche since ancient times.
Classplus through its unique Teacher-Student platform is able to become the default medium of communication for this Influence. It allows the tutor to seamlessly communicate and interact with all her students in a group format. On the other hand, it helps students to have an active channel with the tutor to get queries addressed and for accessing infrastructure such as online tests. As competitive exams in India go completely online, modernising the existing paper-pen based infra is a must-have for the market. In addition, the platform unlocks instant access to data on the mass offline student population, data that can be used to shape the learning for the student and make powerful content recommendations.
SaaS as the Moat
Talking about the platform brings me to our second part of thesis: SaaS-enabled platforms. SMEs (and tutors are very much that) in emerging markets are fast moving online. Educated by the consumer push of every day apps such as WhatsApp and PayTM, the Indian SME owner is on the look out for software solutions to manage their current infrastructure challenges. These solutions usually take the form of Mobile ERP, CRM, HIMS, and HRMS. Simple UX, Low Feature Clutter, yet Powerful domain-specific products are finding adoption across verticals.
Classplus builds on this exact thesis by providing a simple ERP for tutors to manage their business end-to-end. From fee payments, attendance, and batch management on administration front all the way to online tests and learning content on LMS front, Classplus covers it all. The business domain specific product comes with the usual SaaS stickiness attached to it, thus creating strong moats for the business.
When I sat down to listen to Mukul Rustagi’s (founder of Classplus) pitch for the first time in a Cafe, we were interrupted by two inbound calls from tutors who had discovered the platform and wanted to use the platform internally. One of them was from a metropolitan, but interestingly the other one was from a tutor in a Tier-3 town. While Indian SMEs might not be at the maturity to pay a lot for B2B subscriptions they are definitely ready to adopt domain specific solutions for their business.
India’s private education industry is crossing $20B, yet barely 5% of it is online. Access to quality education can only be enabled by distributing digitally. Meanwhile youth is increasingly aspirational, and every child wants to get in to that top-ranked college or cushy govt-job. Classplus’ unique Offline-to-Online strategy is what we believe can make a giant dent in this market bringing a lot of data hitherto offline into the digitised world.
We are very excited to be on this ride with Mukul Rustagi and Bhaswat Agarwal.