Note to Readers: The Germ of an Idea is a series that hopes to inspire thousands of potential Indian entrepreneurs who are on the cusp of starting up or have ventured recently or are currently in schools and colleges dreaming of turning founders.

Dinner-table conversations at the Mehta household always involved discussions on education and learning.

Today, as co-founder of edtech unicorn LEAD (Leadership in Education and Development), when Sumeet Mehta looks back on those days, he realises the big role his dad, a well-respected teacher in Pathankot, has played in shaping his early thoughts in this spectrum.

Mehta and his wife Smita Deorah were working for P&G in Singapore and leading a good life when they felt a vacuum in their professional lives. There was this feeling that they were not contributing meaningfully at work. They left Singapore in 2007, with Mehta joining Zee Learn as its CEO in India.

Today, their startup, LEAD, is a school edtech unicorn, serving 5 million students in over 9,000 schools, providing them with elaborate learning and teaching tools in the form of smart classrooms and other associated digital learning infrastructure.

The company became a unicorn in 2022 when it raised $100 million in an investment round led by WestBridge Capital and GSV Ventures.

LEAD, which today has a valuation of $1.1 billion, has received a funding of $170 million till date. The dinner-table conversations at home didn’t prove futile at all.

The Germ

India has about 1.5 million schools, of which nearly two-thirds are government schools. The private schools can be broadly categorised as high-fee schools (annual student fee above Rs 50,000), affordable private schools (which is where bulk of the private schools belong to) and low-fee schools. A child in India typically spends 6-7 hours in school each day.

The couple believed that the teaching-learning outcomes in a vast majority of  schools, especially in small towns and villages, remained sub-par.

This led them to cofound LEAD in 2012. LEAD was founded with the objective of building an organisation of perpetuity, and to eliminate the inequity in education between students in small towns and those in metros.

The turning point was when one day Smita, now back in Mumbai, ventured into the home of their domestic help and witnessed the lack of access to quality schools and teachers herself. She realised how children from under-privileged backdrops struggled to have even the most basic education.

She then created Sparsh, an NGO aimed at uplifting anganwadis in Mumbai, where they implemented a ‘pre-school in a box’ solution in 16 anganwadis to prepare students for school, to reduce dropouts and to boost attendance.

It was apparent that children in most parts of rural India did not have the privilege of good education. Lack of a competent K-12 English medium education was holding them back. Mehta, meanwhile, gained significant exposure with Zee Learn, and decided to get into the entrepreneurship journey, along with Deorah.

They started their journey with a single school in Areri village, in Kheda district, 35 km from Ahmedabad, Gujarat. “Translating pedagogies that worked in expensive schools to a resource-constrained environment required creativity, systems thinking and a first principles approach,” Mehta told Moneycontrol. For instance, unlike in expensive schools, teacher skill was a major issue in smaller educational institutions.

“In a typical 1:40 teacher to student setting, the teacher has only the text book to rely on. The book leads to a lecture and then in the hands of an average teacher that turns into rote learning. Right now, India’s classrooms are designed for the average. Learning proficiency is different for each student, and teaching needs to cater to all students,” said Mehta.

Early Days

What helped the family to take that decision to turn entrepreneurs was the fact that their lifestyle needs were limited. “We led a simple lifestyle anyway and wanted our children to get good education. Since we were earning in dollars, we knew our lifestyles could be managed, whenever we made the transition,” Deorah said.

Initially, the couple thought it would be prudent to launch schools. After opening five of them, they realised it was like drops in the ocean in a big country like India. This way they wouldn’t be able to have the impact they desired. It’s much later that they zeroed in on the B2B business of providing edtech infrastructure to schools.

“Sumeet asked me whether I was okay with not making money. I said that was fine. That’s how we jumped. We had enough savings to last for some time, so we were not too worried at that point,” says Deorah.

The road ahead

LEAD’s stated mission is to provide learning to 25 million students across 60,000 schools in India by 2028. To achieve this, it is trying to bring about a shift in the learning ecosystem towards a new approach – both pedagogical and technological – moving away from rote learning.

LEAD is today positioned as an integrated, NEP-aligned multi-modal school edtech system, comprising a combination of video-enabled books, apps, classroom digitalisation solutions and pedagogical methods. Recently, the B2B company also acquired Pearson India’s K-12 business to expand its reach to higher end schools, besides affordable private schools in tier-2+ towns.

In FY22, LEAD’s net loss (year on year) widened to Rs 397.1 crore, largely on account of employee benefit expenses and an increase in promotional activities, while operating revenue stood at Rs 133.2 crore, growing more than 2x. It had reported a net loss of Rs 126 crore in FY21. Its operating revenue stood at Rs 57 crore in FY21.

“We continue to expect our revenues to grow 2x in the foreseeable future, as we believe the solutions that we provide are relevant,” said Mehta. “Ours is a very high initial investment business because we have to build the whole technology and curriculum stack for the country. We are like the R&D centre for all these schools. In FY25, we will be EBITDA-positive. I believe India needs to get back its deserved place in the world and that’s only possible if education gets better,” Mehta added.