Startup LEAD looks to scale school tie-ups, narrow losses in FY24

Bengaluru: Edtech unicorn LEAD is looking to expand its network of schools to 11,000 by the beginning of the next academic year, on the back of expansion to new school segments, acquisitions and general operational scale up, co-founder and chief executive officer Sumeet Mehta told DH.

“We are looking at different school segments and identifying what is their nuanced need for which we can create a variant of an integrated system and help them adopt multimodal learning. We’ll continuously look at going to lower fee segments so that we can go deeper into India, and then also go to the higher fee segments,” he said.

As for tying up with government schools, which make up for a bulk of India’s education landscape, Mehta said while the company is open to the idea, it provides few avenues to generate profit.

“Right now there is no enabling environment for really strong public private partnerships where the private player can actually have a path to revenue. If there is a sustainable business proposition where we can marry our mandate, and our impact, we would love for it to happen. Unfortunately, I think most state governments think of education as partnering with nonprofits,” Mehta highlighted.

The B2B edtech firm, which last raised $100 million in January, has received $185.6 million over 6 fundraising rounds since it was founded in 2012. LEAD is now looking to become EBITDA positive by FY25, and Mehta is waiting for the macroeconomic and funding environment to improve before raising another round.

“Now it is about figuring out when is the right time. Equity market is improving. Both RBI and the US Fed have clearly indicated that next year, they’re going to bring down interest rates. So that whole debt to equity cycle has to improve, then private equity investment will automatically become better,” Mehta said.

In FY23, LEAD narrowed its losses by 18.5% to Rs 332 crore with its operating revenue more than doubling to Rs 273.1 crore from Rs 132.3 Cr in FY22. Mehta attributed this to the improving margins of schools, which suffered major losses during the pandemic. The company is aiming to post a third of the losses in FY24 compared to the previous fiscal as it continues to focus on decreasing cash burn by scaling down marketing expenses.