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How Test-Prep Startup Adda247 Onboarded 2 Mn+ Paid Users By Focussing On Vernacular & Affordable Education

SUMMARY

Test-prep startup Adda247 offers online live classes, on-demand video courses, mock tests and e-books for 500+ government job exams

Its courses are available in more than 12 vernacular languages and cover government exams in 15 states

“Most of our courses cost between INR 2K and INR 5K, to ensure affordability for students coming from smaller regions,” says Anil Nagar, founder and CEO of Adda247

Anil Nagar, resident of a small village in Uttar Pradesh, was among the first members of his family to go to college. His parents believed that higher education is the key to a bright future. And sure enough, Nagar confirmed their belief.

After graduating from IIT, BHU in Varanasi, he landed a job at multinational consulting firm Cognizant. 

But the first-generation college grad wanted to go off the beaten track and shape the future of small-town and rural youth by training them for government job exams. 

“I noticed that many young people in my village could not find jobs in the private sector because they weren’t fluent in English or didn’t have exposure to bigger cities,” said Nagar.

“Nevertheless, they can be exceptionally good at various subjects like maths or science. Given the right guidance, they can also crack competitive exams for government jobs as the recruitment process there is very structured,” he explained. 

In 2010, Nagar met Saurabh Bansal, former vice president of YES Bank, who shared his vision of making quality education accessible and affordable for all. Together, they embarked on their entrepreneurial journey with Noida-based Career Power, an offline coaching institute to help students prepare for government jobs.

Within six years, the duo opened 100 branches of Career Power across India. Even though the business was profitable, the founders felt that the offline route was restricting their dream of reaching every nook and cranny of the country. 

“We want to help every Indian who aspires to land a government job,” said Nagar.

Led by this conviction, they decided to take the pain out of the tedious job exams and aimed to make quality training accessible country-wide. That’s how adda247 was born in 2016.

The edtech platform offers online live classes, on-demand video courses, mock tests and e-books for more than 500 competitive exams (both at national and state levels) in more than 12 vernacular languages.

Adda247 claims to have 2 Mn paid users, conducts 10,000+  live classes a month and says that more than 80% of its students come from Tier 2 and 3 locations. It is currently on an annual gross revenue rate of $30 Mn and claims to have raised $20 Mn in primary capital across three funding rounds.

Adda247 Factsheet

How A Personal Experience Led To The Birth Of Adda247

While his passion for democratising education always shaped Nagar’s professional choices, it was only in 2015 that things took a steep turn in this direction. 

“That year, I visited my village Dankaur to attend a family wedding. I personally knew the bride and remembered her to be a bright student in school. It was disheartening to see that she could not continue her higher education since her family did not have the financial resources to support her,” he recalled.

The incident had a deep impact on Nagar and formed the bedrock for his online endeavour. The decision to go online as early as February 2016 was strategic too, he told Inc42. 

“The (soft) launch of Reliance Jio in December 2015 opened huge possibilities. We knew internet services would be more affordable and accessible for people in small towns. And students could prepare for job exams by leveraging online channels,” said Adda247’s other founder and chief operating officer, Saurabh Bansal. 

Bansal was not mistaken. India has seen a rapid rise in internet users, from 21% in 2017 to 61%, as of 2022, according to Inc42’s report titled The State Of Indian Startup Ecosystem. The study further estimates more than 373 Mn rural internet users in the country. 

The founders also clarified that the edtech platform is neither an online extension of Career Power nor a pivot from its offline format. In fact, both brands currently operate under the parent company called Metis Eduventures. 

However, setting up a digital-first company without prior experience was challenging.

Building An Edtech Brand For Bharat: Vision, Opportunities And Challenges

Nagar said that when the startup began operations in 2016, it received many website visitors looking to explore online platforms to prepare for government jobs.

“We focussed a lot on community building at the time to ensure people had enough information about exam preparations and used peer support to widen their knowledge,” said Nagar.

Here’s a case in point. In 2016, it launched BankersAdda to share all banking test prep-related resources and spread the word about Adda247. Nagar said that the user engagement spiked and the brand was able to get a lot of organic user growth. 

However, after creating initial traffic on its app, the challenge was to convert these free users into paid customers. 

To ensure a high conversion rate, the startup adopted a two-pronged strategy. 

First, it offered free content (via blogs and vlogs) along with paid courses. “We realised that most first-time users came from small towns and non-metro cities and wanted to experience the product before buying it. The free material helped them get a broad idea of what they would require for test preparations,” said Bansal.

Second, it invested in building a strong student counselling team to help users find the best courses, understand the offerings and guide them through the onboarding process. With these initiatives in place, the startup managed to increase its conversion rate by 5x. 

As quality education forms the core of its business, Adda247 hires highly trained teaching staff and conducts regular recruitment drives to onboard skilled teachers. 

Besides, it has developed many gamified features for better engagement. Existing users can earn in-app virtual coins to buy new courses and unlock new features. “Gamifying a learner’s journey ensures their retention on the platform,” said Nagar. 

Despite the initial hiccups, the edtech player got good traction by helping aspirants land their dream jobs. In 2019, approximately 67% of the candidates who got through the State Bank of India’s Probationary Officer (SBI PO) Exam were from Adda247 users, the company claimed. 

The brand has a freemium revenue model and most paid courses on the platform cost between INR 2K and INR 5K. Adda247 charges between 15-20K for much coveted UPSC exam preparation.

Why Vernacular Is A Game Changer

According to government data, more than 22 Cr Indians applied for government jobs between 2014 and 2022. But only 7.22 Lakh or 0.33% of the candidates were selected. This clearly shows that young Indians still prefer public sector jobs despite a stringent selection procedure.

While the total addressable market (TAM) for Adda247 is massive and widely spread across the country, it went through a tough phase during the initial pandemic days as many recruitment exams were postponed due to stringent lockdowns. 

However, instead of spending an enormous amount on marketing to bring users onboard, the edtech platform used the covid period to broaden its course catalogue and add vernacular options to reach a bigger user base. 

Till 2020, it used to provide preparatory courses for just four national-level exams across banking jobs (SBI PO, IBPS Specialist Officer Exam, NABARD Development Assistant Exam and more), teaching jobs (CTET, KV, UGC National Eligibility Test), defence (Navy, Airforce, Agniveer, Service Selection Board) and Staff Selection Commission (SSC). 

In early 2020, the startup launched courses for state exams such as State Public Service Commission (PSC) in four languages – Tamil, Telugu, Marathi and Bengali. Soon after, it added more languages such as Odia, Punjabi, Gujarati, Assamese, Malayalam and Bhojpuri. 

“Our vernacular segment has grown very rapidly, and we cater to almost all state-level exams in more than 15 states. Our user base in the vernacular segment has grown more than 10x in the past year,” said Nagar.

In addition, Adda247 is rigorously building its UPSC (IAS, IPS, IFS) category as it is the most coveted category among all government job aspirants. In December 2021, it acquired Delhi-based edtech platform StudyIQ for close to $20 Mn in a cash-and-stock deal to strengthen its UPSC offerings as the target company specialised in UPSC and state PSC exams. 

“StudyIQ is one of the largest edtech platforms with high-quality content in the UPSC segment. Its YouTube channel has more than 13 Mn subscribers and gave us wide organic reach among UPSC aspirants,” said Bansal.

“The acquisition has been a game changer for us as earlier the UPSC category was a weak link in our bouquet of government jobs prep offerings,” he added. 

Today, Adda247’s preparation stack covers almost all government jobs — from national recruitment exams to state-level recruitment exams. 

Can Online Test-Prep Startups Survive Hard Times?

In its next phase of growth, Adda247 plans to double down on its state exams’ vertical and focus more on vernacular content. 

The edtech startup believes that test preparation in rural areas is still largely untapped. 

“The key elements of cracking the market in smaller places are vernacular and affordability. We are bullish on this market and plan to scale our offerings in the underserved areas,” said Bansal.

There is one glitch. All its aggressive growth plans come at a time when the startup ecosystem, in India and across the globe, struggles to cope with a funding winter that may last around 12-24 months. 

A looming downturn of the global economy would not help either. As the news of cost cuttings and layoffs across edtech startups like BYJU’S, Unacademy, Vedantu, Toppr and more become routine, one is forced to ask whether the pandemic-driven edtech bubble has burst too soon.

Interestingly, unicorns like Unacademy and BYJU’S have done a partial pivot and started operating a few brick-and-mortar units. Although BYJU’s near-billion-dollar buyout of the offline behemoth Aakash Educational Services (AESL) in 2021 happened much before the crunch time, this non-digital asset is expected to stand in good stead if it comes to bailing out the edtech giant, think industry experts. 

Will Adda247 take a similar route and lean on its offline business if edtech startups continue to face a cyclical downturn?

Nagar did not think so and was ready to bet big that the online test-prep market would continue to thrive in the long run. 

“The focus has shifted from the madness around growth and cash burn to sustainability and profitability,” noted Nagar. He claimed that despite funding heavily in building vernacular capabilities in its state exam category, the startup is profitable. 

Despite the so-called funding winter, many investors have shown interest in our brand, and we will be raising our next round of funding soon,” he concluded.

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