At Sparsha's Virtual Labs, Textbooks Touchbase With Innovation

Forget the traditional education videos, exchanging notes with peers or all-night cramming to get set for the exam day. Here is the latest format of learning called 'virtual lab' education, initiated by the Bangalore-based start-up Sparsha Learning Technologies, which makes learning more interactive and efficient through Web-based technologies.

Set up in January 2010, Sparsha has a research & development unit in Bangalore and runs another office from the Science & Technology Entrepreneurs Park (STEP) at IIT Kharagpur. The company develops custom solutions for activity-based learning in K-12 and higher education domains. Its products focus on simulation-based learning – combining technology with social interactivity to create an interesting and engaging learning experience.

But with a lot of fast-growing and well-diversified education solutions providers operating across the country, why was Sparsha set up in the first place?

Ask Debabrata Bagchi, an IIT-Kharagpur alumnus and the founder-CEO of Sparsha, and he comes up with a relevant point. "In the West, hands-on education is the current trend, but here in India, it's mostly textbook-oriented. You just follow the curriculum without developing any specific skill set that will help you solve a particular problem. As a start-up, we wanted to come up with a new concept and aimed to provide hands-on learning solutions. The infrastructure is really poor, even in some of the engineering colleges, and students only learn what's there in the books. Sparsha has been created to change that traditional system of learning."

Incidentally, around nine lakh students pass out from various engineering colleges every year of whom only 10-15 per cent are job-ready. One will also find a dozen finishing schools in the country that offer supplementary courses to make them employment-ready but those are too few. Therefore, an initiative like Sparsha may help students from early stage make them innovation-oriented.

The vision caught on – so much so that IIT and IIM graduates, as well as senior professors from premier institutes (IITs and IISC) came on board as co-founders and advisors. Co-founder Kapil Kaushik is a graduate from IIT-Delhi and he used to be a part of the technical team at Magma Design Automation before starting Sparsha. Shivoo Koteshwar, one of the key advisors and mentors, is a director of the implementation group at Synopsys. And Prof Anup Kumar Ray, a visiting faculty at IIT-Kharagpur, is also a director and mentor at Sparsha.

Initial Hurdles

"Sparsha did a pilot project for the HRD ministry and it was a stepping stone for us. It gave a concrete shape to what we wanted to build, gave us confidence, acted as a prototype for our company and helped us with good cash flows," says Bagchi.

But along the journey, the education content provider has encountered the routine hurdles that start-ups are bound to face. Finding the best talents while working on a shoestring budget was decidedly tough. It essentially meant multi-tasking at its best – right from writing codes, testing, marketing, deploying products and getting feedback at every stage to keep improving.

"The two most daunting things that the firm encountered at that period were changing people's mindset and help them adopt innovative methods of teaching," recalls Bagchi.

It also took a long time to get any kind of feedback from users. Then there were long development cycles and delays in generating sales and revenues.

Tackling bigger players in the market was another critical issue. "It's really tough to get the colleges on board because big brands have the money and the manpower to get them first," rues Bagchi. "Since we are a start-up, no one knows much about us. It's, therefore, extremely difficult to push our product – only the value of that product will push us and nothing else will. Fortunately, Sparsha is at a stage where we get repeat orders and more licences are sold because of our product quality and the convenient pricing," he added.

However, the company has managed to survive in this space due to its advanced technology and quick turnaround time. In a start-up, the technology is organically developed unlike the big companies, who need to procure it from others before deploying the same. Also, start-ups focus on more advanced technology instead of traditional solutions mostly offered by big companies in this space.

"Customer acquisition is another focus at Sparsha as opposed to sales target, which big companies focus upon," says Bagchi.

Technology & Biz Model

Using simulations, Sparsha creates activity-based courseware for engineering colleges, polytechnics and other degree/science colleges, and these are sold by its own team or through its partners. The company has a subscription-based model in place that works on per-course, per-student basis.

"As far as price points are concerned, the company negotiate with the college management concerned. Many of the autonomous colleges mandate these courses for their students, which means more students can access our courses and the price point will be less," explains Bagchi.

The company has already developed course modules for Electronics (degree-level and polytechnic courses) and currently working on Computer Science and Electrical Engineering. It is expected to come up with the courseware by March 2012.

"Each course is priced between $5 and $10 (Rs 250-Rs 500) per student and we currently offer these courses to 12 colleges across the country. Also, they are being evaluated at 20 odd colleges in Bangalore, Pune, Orissa and Tamil Nadu. We are also testing a few pilot projects in the USA," details Bagchi.

"The higher education dgfev online casino market in India is just opening up, and is expected to grow at 15 per cent CAGR and cross $22 billion by 2013. So many of the K-12 players are now starting to move towards higher education, but lack quality content and solutions is a major concern," says Adit Parekh, investment manager of Blume Ventures that has invested in Sparsha.

Competition

"As Sparsha is the only company that offers 'virtual labs' education in the country, we haven't faced any competition yet as far as course offerings are concerned," says Bagchi.

However, the firm is facing some tough competition from bigwigs like Educomp, Excelsoft and Schand Edutech, all vying for funds from the same corpus allocated by colleges to be spent on such educational content.

"What Sparsha offers is a complementary service and not competition. They are catering to a niche segment while we (Excelsoft) offer a bigger technology platform for products and services in the e-Learning domain, which is very basic for any student," said an official at Excelsoft.

Fundraising

"Initially, there was a lot of apprehension when we were looking for funds. Investors were not ready to put in their money as scaling up in education space believed to be extremely tough. All the venture capitalists we met were looking for a business model with a well-defined success formula. But if I knew that formula, we wouldn't have required the funding. We would have adopted it straightaway," notes Bagchi.

However, in September this year, the education solutions firm has raised an undisclosed sum in seed funding from Blume Ventures and Tempus Capital. The proceeds have been used for courseware development for technical and non-technical streams. Still, most of the VCs are essentially investing in e-commerce companies like Flipkart and Snapdeal, and education is not yet a priority for them, feels Bagchi.

The company will go for a bigger round of funding in April 2012 and is already in talks with multiple partners for the same. The monies raised will be used to create more courses for different streams.

Asked about Blume's investment in Sparsha, Parekh says, "We invested in Sparsha because of the firm's forte in creating rich, activity-based content that makes it different from other players who are focusing on simple text/video or animation-based content. The company aims to become the premier content provider for activity-based learning solutions. As it is scaling up in various verticals, we see really huge potential here and expect rapid growth."

Incidentally, education services firms have been attracting funds from both strategic corporate investors as well as private equity firms. There are several education-focused PE funds, as well as generic growth capital funds, who are now eyeing this space.

Future Plans

Asked about the company's prospect, Parekh of Blume Ventures said, "With the popularity of Tablets and similar handheld devices in education space, we see a huge growth potential – both in domestic and international markets. Sparsha is closely working with various educational providers, publishers, etc., to create engaging digital learning solutions, which can be scaled up."

However, the company is not solely relying on B2B sales for revenue generation. It will soon launch interactive learning apps for iPad and android-based devices. "Given the rising popularity of these devices, we believe this will be the fastest way to scale up," sums up Parekh.

"We want to be considered a leader in 'virtual labs' when it comes to higher technical education. And we want a higher valuation for the company to raise a larger amount, so that we can grow further," concludes Bagchi.

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