Navigating the Future of Education Funding & Financial Resilience

By: Saradha Govindarajan, Chief Financial Officer, Veranda Learning

Saradha Govindarajan brings over 15 years of multifaceted experience across industries, specializing in financial leadership and strategic growth. Starting her career with the Mahindra Group’s leadership program, she honed her management skills before leading financial operations at Qube Cinema Technologies and Dr. Agarwal’s Eye Hospitals. Her expertise includes fundraising, mergers and acquisitions, business finance, and strategy, with a proven ability to manage complex operations and drive organizational success.

In an insightful interaction with Women Entrepreneurs Review Magazine, Saradha shares insights on the evolving financial landscape within the education sector, particularly post-pandemic. She discusses the balance between traditional funding sources and innovative financing models, the financial viability of EdTech, and strategies for ensuring resilience amid global economic uncertainties.

How do you foresee the balance between traditional funding sources and innovative financing models (equity, structured debt) in the education sector evolving in the next five years?

The post-pandemic era has accelerated the need for diversified modes of funding within the education sector. Traditional funding, like government grants, continue to remain vital for stability, but there’s a definite shift towards more flexible and scalable financing models such as private equity and structured debt. These models provide growth capital and adaptability, aligning well with the rapid pace of innovation and expansion in this sector. Over the next five years, I expect the education space to embrace hybrid funding structures which will blend stability from traditional sources with the agility of modern financing. This balance will allow companies like Veranda Learning to scale efficiently while managing financial risks and responding to evolving market dynamics.

With the rapid rise of EdTech and digital education models, how do you assess the financial viability of these new models compared to traditional brick-and-mortar institutions?

EdTech and digital education models are capable of offering better financial viability compared to traditional institutions, largely due to their ability to reach a broader audience with minimal physical infrastructure. The scalability of digital models offers higher potential returns; However, these models are today affected by very high customer acquisition costs and low customer lifetime value. In order to acquire customers, huge investments are raised and employed leading to unsustainable business. In such cases, when the funding dries up or marketing initiatives are fine tuned, there is no student enrollment happening. Investment strategies must prioritize product market fit, technological innovation and learner engagement to enhance retention and reduce churn. At Veranda Learning, we have balanced growth with sustainable cash flows. In our online business models, we are continuously revisiting financial metrics like customer acquisition costs and overall profitability to stay competitive in this evolving educational landscape.

What role do strategic partnerships and acquisitions play in sustaining growth and financial stability? How should CFOs evaluate these opportunities from a financial perspective?

Strategic partnerships and acquisitions play a major role in driving growth and financial stability by expanding market reach, enhancing capabilities, and diversifying revenue streams. For a listed education enterprise like Veranda Learning, these alliances allow for rapid scaling and access to innovative solutions in an asset / investment light manner. CFOs should evaluate such opportunities through a rigorous financial lens and alignment with long-term business objectives and potential integration synergies. Minimum guarantees, build vs buy, Payback period, RoI can be used for financial assessment. Assessing cultural compatibility and technological integration with the partners / sellers is equally essential to ensure a smooth transition.

How do you ensure that educational institutions remain financially resilient in the face of funding cuts, fluctuating enrolment rates, and rising operational costs?

Ensuring financial resilience in uncertain economic climates requires a prudent approach to cost management, a focus on sustainable revenue streams, and an agile operational model. For companies in the education space, diversifying revenue sources can provide stability. Closely monitoring enrollment trends and adjusting offerings to meet market demands is also critical. Building financial reserves, optimizing cost structures, and maintaining a robust risk management framework are key strategies to counter fluctuations in funding and enrollment. Additionally, leveraging technology to streamline operations and enhance efficiency will help contain rising operational costs, ensuring a strong financial foundation even amid external uncertainties.

How are trends shifting in global education funding? What should EdTech CFOs be doing differently to capitalize on emerging funding opportunities?

Global education funding earlier was mostly towards growth-stage investments from venture capital, private equity, and strategic investors who are drawn to this sector’s high-growth potential. These investors have started seeking scalable models with proven traction, with pressure to demonstrate not only growth but sustainable profitability. So, the shift will see funding for profitable companies with proven models and late stage fundings being larger cheques than early-stage funding. CFOs should adopt a proactive approach by building compelling financial narratives around user acquisition, engagement, and retention metrics. CFOs should work with businesses and ensure profitability and proven scalable business models are built. Transparent financial reporting, strong governance, and alignment with investor expectations in terms of scalability and impact will help attract favourable funding.