How to identify gaps in the study abroad market

TL;DR

The study abroad market is large and underexplored, especially among India's 1.3 million students and a high-spending 22 million income tax payers segment. Opportunities exist in pre admission, admission, and post admission services, plus financing and premium Indian programs. Investors can slice data to find high value gaps in education and related services.

Transcript

hi everybody in the past two years think school has been investing in multiple startups in different categories we've invested in a mental health startup called mve Health a ftic startup called wi wealth and even a tech company called unicorn. so as we enter this space of Angel investment we are doing some extensive research to find the most releva... Read More

Key Insights

• Indian students abroad spend around 46,666 dollars per year, equating to about 38.8 lakh rupees, signaling strong purchase power for high-ticket education services.
• 1.3 million Indian students study abroad, and the total global study abroad market is 6.4 million students, highlighting a large demand base with India as a key segment.
• $27,500 is the typical annual tuition purchase power for a student seeking MBA or STEM in India, suggesting premium in-country programs could be viable at high price points.
• The study abroad market is divided into pre enrollment, admission, and post admission, with each phase offering distinct opportunities like test prep, consulting, and housing arrangements.
• Toil and IELTS tests pose cost and access barriers in India, creating room for alternative providers that lower price and increase accessibility.
• Lending for overseas education is substantial, with NBFCs and banks offering loans up to 70 lakhs and interest rates around 11-12.7%, indicating a strong demand for more competitive financing.
• Application and admission consulting is a high-impact area, given the need to secure admissions to multiple universities and the cost of standardized tests and score submissions.
• Premium education providers in India could target the 22 million income-tax paying segment, which concentrates a majority of consumption and offers a potential market for high-margin products.
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Questions & Answers

Q: How big is the Indian study abroad market and what is the share of Indian students globally?

The video states that 1.3 million Indians were among the 6.4 million students studying abroad globally. This indicates that India contributes a significant portion of the international student population, signaling a large and focused market segment for services related to study abroad, including preparation, admissions, and post enrollment support.

Q: What is the typical annual spending by a study abroad student according to the data presented?

According to the data, a student abroad spends about 46,666 dollars per year, which corresponds to roughly 38.8 lakh rupees per year. This figure highlights the high purchasing power of the target students and supports the case for premium, high-ticket educational products and services.

Q: Which three expenditure categories dominate a study abroad student’s budget in the data breakdown?

The data breakdown shows that tuition accounts for about 27,500 dollars, housing about 9,000 dollars, and household and grocery consumption about 6,000 dollars within a total of around 45,000 dollars spent abroad. This breakdown identifies where opportunities for services and products may be most impactful.

Q: What is identified as a major gap in the pre admission phase for studying abroad?

A major gap in pre admission is the admission and application consulting space, including English proficiency testing, admissions consulting, and financing. The transcript highlights that Toil and IELTS have high costs and limited score reporting options, creating an opportunity for more cost-effective and convenient alternatives.

Q: Why is the English proficiency test market seen as a gap, and what solution is proposed?

The English proficiency test market is viewed as a gap because tests like Toil and ises are expensive and limit free score reporting to a small number of colleges, with many test centers and takers in India. A potential solution is an alternative like the Duolingo English Test, which costs less and offers unlimited score submissions.

Q: What lending market opportunity is mentioned for study abroad, and what characteristics make it attractive?

The lending market for study abroad is sizable, with brands like HDFC Credila and Avance and NBFCs holding a large share. The opportunities include offering faster processing and lower interest rates than traditional banks, enabling loans up to 70 lakhs, and expanding access for students who need financing for education abroad.

Q: Which customer segment is identified as the premium market in India for high-ticket education products?

The premium market is identified as the 22 million income tax payers in India who collectively drive a large portion of consumption. This segment represents a high-value customer base for high-ticket education products and services, such as premium in-country MBA or STEM programs that align with abroad study pathways.

Q: What is the suggested strategic approach for investors in the study abroad space according to the video?

Investors are advised to slice and dice the data to identify gaps in the market, focusing on high-value opportunities in pre admission, admission, and post admission stages, as well as financing and premium in-country programs. Even if not building, understanding the market gaps can guide informed investment decisions.

Summary & Key Takeaways

• The study abroad market has a large potential driven by high spending from Indian students and a subset of the population with substantial disposable income. The data is broken into pre enrollment, admission, and post admission opportunities, with notable gaps in test preparation, application consulting, and lending.

• Premium education services in India could capture a large share by offering high-ticket programs that align with US, UK, Canada, and Australia pathways, especially for MBA and STEM tracks, leveraging PPP considerations and cost differentials.

• Lenders and fintech players can gain a foothold by offering faster, lower-cost study abroad loans and streamlined application processes, as the current market includes banks and NBFCs with significant but heterogeneous capacity and high interest rates.