Indian edtech platforms are entering a new phase of growth. From the funding highs of 2021, the subsequent bust when schools reopened, to focusing on value instead of valuations in the aftermath of BYJU’S debacle, edtech startups have all the while competed for direct user sign-ups. Now, they are embedding their services within school and learning ecosystems, blended learning centres, and hybrid offline models, turning institutions into distribution engines and stabilising revenue streams.
BrightChamps exemplifies this shift. After moving from a B2C model in 2023, nearly 90% of its India revenue now comes from school partnerships. This pivot helped the startup reach 35,000 students by late 2023, and over a million by early 2025.
LeadSchool, too, has partnered with 8,600+ schools across 20 states. It generated revenue of ₹351 crore in FY25, with net losses narrowing 70% year-on-year owing to the business-to-institution (B2I) play.
The shift in revenue generation comes as more teachers embrace AI. According to a survey by the Centre for Teacher Accreditation, over 70% of teachers across India are now using AI tools. The adoption is also driven by the National Education Policy 2020, which encourages the use of digital tools. This has created a demand driven by schools looking to build trusted AI ecosystems, and Indian edtechs sense a new opportunity.
Why Are Schools and Edtechs Collaborating?
Analysts suggest multiple reasons behind the B2I pivot, including rising customer acquisition costs (CAC), waning funding, and the need for sustainable growth.
Suraj Biswas, founder and CEO of Assessli, which offers AI-driven personalisation solutions, told AIM that many edtech firms struggle with profitability because their CAC is much higher than offline. “A lot of marketing and retention goes into online as the CAC to Lifetime Value (LTV) ratio is small, which should ideally be 1:7—if CAC is 10%, LTV should be around 70%,” he explained.
The CAC-to-LTV ratio shows how much more a customer is worth than it costs to acquire them. It’s an essential metric in evaluating business sustainability, growth potential, and operational efficiency.
Meanwhile, India’s edtech landscape has also suffered from a funding drought, forcing players to look for new revenue streams. Capital inflow slowed drastically from $4.1 billion in 2021 to $215 million by September 2024. While edtech investments jumped 5x in H1 2025 compared with the year-ago period, according to Venture Intelligence data, it’s still far below the funding highs of 2021 and 2022.
Competitive pressure from coaching institutes and preparation-focused centres is also a big driver behind the shift. “If schools don’t collaborate with tech or coaching platforms, students shift to dummy schools. That’s both a learning loss and a business loss,” said Biswas.
Beyond competition, schools lack the internal capability to build advanced AI systems. “Collaboration is the only way to stay ahead of the curve,” he noted.
This has opened doors for edtech companies to offer AI-powered tools that automate evaluation, reduce teacher workload, and generate deeper insights into student learning.
ChatGPT, Gemini Are Not Classroom Solutions
Despite the rapid adoption of ChatGPT and Gemini for Classrooms by students and educational institutes, stakeholders emphasise that foundation models alone cannot meet school-level requirements.
“The application layer and the foundation layer are different. ChatGPT and Gemini are generic platforms. Schools need class-wise, subject-wise, curriculum-aligned solutions,” said Biswas.
He mentioned that Big Tech firms like Google and OpenAI can’t customise workflows suited to the needs of each school. This is also a complex undertaking given India’s diverse boards and assessment structures. This creates a clear role for edtech companies to build contextual application layers, safety guardrails, and institution-ready experiences on top of foundation models.
“General-purpose AI cannot address Indian classroom realities on its own. Edtech companies provide the implementation layer that drives adoption,” said Mathew KG, Principal, Excel Public School, Mysuru.
AI-Native SaaS in Institutes
Traditional school software is getting a facelift. Legacy enterprise resource planning (ERP) and learning management systems (LMS) are increasingly being re-architected as AI-first platforms.
“ERP and LMS will not exist as standalone products for long. They are converting into AI-based systems that integrate learning, assessment, and analytics,” Mathew said.
Private schools like Excel Public School, Ekya School, and Orchid International School are already deploying a wide SaaS stack, including AI-powered lesson planning, quiz creation, learning management, and evaluation tools
“There is growing acceptance among teachers and students for AI tools that reduce workload and improve outcomes, provided they align with pedagogy and safety,” said Mathew KG.
Muneer Ahmad Khant, VP of sales and marketing at visual solutions provider ViewSonic India, said that the evolving trend in B2I will be “the seamless integration of advanced AI technologies from OpenAI and Gemini with increasingly personalised, offline-enabled edtech solutions.”
Biswas emphasised the importance of frictionless AI. Rather than tablets or wearables, demand is emerging for edge-enabled edtech hardware that supports assessment, attendance, content delivery, and learning analytics without increasing screen time.
“Parents in India do not like increased screen time, and students are distracted by more screen simulation. BYJU’S’ Smart Tab failure is indicative of this shift. Instead, teachers could use SaaS tools, and classrooms could be powered by cameras to catch student behaviour and engagement,” he suggested.
Evaluation Is the Hardest Problem
While AI’s use in teaching and content creation is rising, evaluation remains the sector’s biggest bottleneck.
“Evaluation is where the nub of the problem lies,” former IIM Bangalore professor A Damodaran noted. “Your evaluation system will decide whether you create innovators or just machine cogs.”
Most schools remain cautious, concerned about cheating, AI hallucinations, and shallow learning. As a result, AI is rarely trusted for assessment.
Edtech startups are attempting to change that with AI-driven evaluation tools that go beyond marks to analyse conceptual gaps, behavioural patterns, and learning trajectories. “Evaluation shouldn’t stop at two out of five [marks]. It should explain why the student got two, what went wrong, and what to do next,” Biswas asserted.
Despite interest, AI-driven evaluation remains expensive to deploy at scale due to massive compute needs and high data costs. “The cost of AI-based evaluation is very high. That’s why only premium or AI-forward schools are adopting it today,” he noted.
Private Schools vs Government Schools
The divergence between private and public education models is widening.
Kerala government’s education-focused tech arm, Kerala Infrastructure and Technology for Education (KITE), has rejected proprietary AI tools, opting instead to build Samagra Plus AI, trained entirely on curriculum-aligned, government-owned data.
“Unless we have absolute control over the dataset and knowledge base, an AI system cannot ensure the accuracy, safety, and alignment needed for school education,” K Anvar Sadath, CEO of KITE, told AIM.
He added that classroom learning must strictly follow the curriculum and a defined pedagogy, and this level of academic control is simply not possible with open, proprietary AI tools such as ChatGPT or Gemini.
On the other hand, private schools have the flexibility to experiment with more customised models of teaching and learning.
“Private schools can focus on deeper personalisation, advanced analytics, and differentiated learning experiences,” said Mathew. “They can integrate edtech tools more closely into classroom practices, assessments, co-curricular learning, and parent communication. Private schools can also work closely with edtech partners to pilot new ideas, refine solutions, and adopt best-in-class tools that go beyond basic digitisation.”
Biswas explained that private schools open up access to their academic resources, including question sets, pedagogy, and teaching practices, which play a crucial role in fine-tuning education technology models.
Indian edtech’s B2I pivot now closely aligns with the US, where edtech companies, including Quizlet, which offers GPT-powered study and assessment tools, and Khan Academy’s Khanmigo, are moving from consumer-facing apps to institution-focused solutions that integrate AI into curricula and administrative workflows. By serving as the implementation layer that bridges foundation models and school-specific needs, companies hope to reclaim the ‘future of learning’ tag that they once held.
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