The Sudden downfall of Lido Learning

For 2-3 years ed-tech sector is booming in India and various startups are coming forward, with aggressive marketing and branding strategies, to offer technology-based education to the customers, providing it in a single tablet or mobile application. No doubt Covid-19 has provided them momentum in reaching customers, access to funding, and more acceptance, but this is the one side of a coin. The other one can be explored through recent news about the closure of Lido Learning.

About Lido Learning

Lido Learning was a Mumbai-based ed-tech company founded by Sahil Sheth, who previously served as the Vice President of Byju’s for over 2 years, in April 2019. Lido’s USP included online tutoring, the curriculum designed by experts from Stanford, Harvard, and IITians, providing 6 students with a personalized batch group, and offering a combination of AI, an immersive curriculum, and gamification.

It offered classes in Mathematics, Science, Coding, and English providing packages in the range of INR 30,000 to NR 1,20,000 to students of KG to 12^th standard.

Timeline of Lido’s funding rounds and recent developments

May 2019: Raised USD 3 million in series A funding from Ananth Narayanan, Anupam Mittal, Ronnie Screwvala, and 11 other investors.

Nov 2019: Raised USD 7.49 million in series B funding from Picus Capital, Madhur Deora, and 19 other investors.

Oct 2020: Raised USD 4.09 million in series B funding from Nidhi Arora, Sanjay Kapoor, and 23 other investors.

Dec 2020: Raised USD 1.4 million in series C funding from Oracle.

Jan 2021: Raised USD 11.5 million in series C funding from Ronnie Screwvala’s Unilazer Ventures, and 33 other investors.

Sep 2021: Announced its USD 10 million funding by Unilazer Ventures and started operations in US and Canada with its flagship coding programme.

Sudden Announcement of Closure

On Feb 4, 2022, Lido’s founders announced to shut the company in an official meeting held, stating lack of funds as a reason to further continue its operations and this happened just 2 days before payday, letting go over 150 employees who were yet to be paid. Moreover, many parents of students, after the announcement, applied for the refund of ongoing tuition packages that too, seem to be a problem for students and their parents.

What went wrong?

There are many reasons responsible for Lido’s downfall which are as follows:

1. Lido was backed by a Chinese investor BAce capital. In 2020 Indian government established rules on FDI having strict measures of government approval for investments from countries that share land borders with India leading to a lack of interest by investors, including Bytedance (the owner of TikTok) and further backing out of the venture making the company difficult to sustain itself financially. 
2. The aftermath of Covid-19 impacted the company’s revenues, as, over the course of 2 years (FY20 & FY21), the company recorded losses of nearly INR 102 Cr. While the start-up’s expenses in FY21 almost shot by 1.4 times, mostly due to the significant rise in employee expenses. It had spent INR 70 Cr, in FY21, a 47.9% increase, from INR 47.3 Cr it incurred in FY20.
3. The company adopted an aggressive marketing style by over positioning the brand and under-delivering its offering and promises that increased its marketing expenses.

Other factors that impacted the company and whole ed-tech sector by hindering their growth include UGC (University Grants Commission) reversing its decision of allowing 900 autonomous colleges to offer online degrees holding the same value as the normal degree to regulate the ed-tech platforms and reopening of schools and colleges resuming their physical classes due to normalized environment after long-held lockdown.

What next?

After this incident, many ed-tech platforms and other software firms are coming forward offering roles to the employees of Lido Learning who are left with no job or any other backup plan. Many newspapers and media sites reported Vedantu, a Bengaluru-based ed-tech startup, is in talks to acquire Lido learning however any public announcement hasn’t been published by both parties yet. However, with this episode new ed-tech platforms and startups can take learning that only branding and increased marketing spend is not enough to make a business successful, one must ensure the optimum delivery of its offering and fulfilling all the promises to the customers for their satisfaction while not neglecting employee satisfaction at the first place. Also, in doing business in the field of education one has to ensure to not sell it as a commodity but a service that is being offered by schools and universities.

References:

1. https://bit.ly/3HPixYV
2. https://www.crunchbase.com/organization/lido-learning
3. https://bit.ly/3tA7IVq
4. https://tracxn.com/d/companies/lidolearning.com
5. https://bit.ly/3MLqu54
6. https://bit.ly/3Kxlhvt
7. https://bit.ly/3CrzeII