JAKARTA (TheInsiderStories) – Minister for Communication and Information Technology Rudiantara projected that the country’s new unicorn, a US$1 billion valued startup company, will emerge from the education sector, no later than 2019. The statement was made in November 2017, after he visited the office of Ruangguru, an educational technology startup company—or edtech. He was pretty confidence saying that Ruangguru would soon follow its forerunner unicorns: Gojek, Tokopedia, Traveloka and Bukalapak.
Ruangguru which was founded in 2014 by Iman Usman and its CEO Adamas Belva Syah Devara has managed to attract investors in expanding its businesses and government supports, despite competitor’s claim that it had more users. It had obtained a seven-digit U.S. dollar Series A round led by Lippo Group-backed Venturra Capital in December 2015. Also joined the round was Singapore-based venture fund East Ventures, who reportedly engaged a follow-on funding after its seed investment in August 2014.
In 2017, the edtech gained another funding, a series B, from Singapore-based UOB Venture Management. It has also received awards in terms of appreciation and training opportunities from institutions including from the tech giant Google through its Launchpad Accelerator program.
Regional Budget on Education
Provinces Using mostly educational videos, Ruangguru is now connecting its 6 million users across the country with about 150,000 teachers, who teach more than 100 field of studies. Users spend in average Rp 54,000 up to Rp 225,000 monthly to view the available learning materials and participate in its online classes. The prices will be lower if users subscribe into longer term package of programs.
The company brings private tutors to every user in much affordable prices (see comparison), while at the same time supporting qualified teachers to earn more. The condition reverses the old notion that one cannot be rich by being mere a teacher.
In the past, parents would send their children to attend extra classes outside the school or hire a private tutor to help them understand better the school lessons or simply to prepare the children in facing the national exam.
Ruangguru and similar edtech like Zenius and London-based Quipper–who develops online education solutions for schools and students in Japan, Philippines and Mexico, in addition to Indonesia — bring such tutoring experiences to the next level so the students could learn their school lessons anytime and everywhere by putting learning materials accessible through their computer or handheld devices.
By doing everything online, these startups enables millions of formal school students learning simultaneously, whether with tutors or peer teaching in preparing for the national exam. It creates the largest classroom in the country. I bet numbers of users and participating teachers will continue to rise given the gap in the country’s school system.
Compare to the three startups mentioned above, HarukaEdu took slightly different approach. The edtech is targeting adult learners in higher education programs. It offers cooperation with universities to develops digital courseware, study materials and facilitate online learning and degree programs. The cooperation will reduce the cost and risk of failure if one decided to develop themselves.
These startups saw education as a promising market. Data from the Ministry of Education showed that compulsory education participants reach 45 million students. Another finding says that there are about five million university students. The total is almost a fifth of the total population of 260 million people. In terms number of schools and teachers the nation has 217,550 and 2,7 million, respectively.
The government is expected to allocate at least 20 per cent of its budget for education. Last year, the central government apportioned Rp 419 trillion ($30 billion) for the sector, which 63.7 per cent of it being transferred to the regional government. The budget equal to Rp1.13 million ($82) per student per annum. These regional governments, except Jakarta, however, failed to set aside the same percentage of their budget to the education sector (see picture). The other 32 provinces allocated merely one to nine per cent of the budget.
With relatively small government budget, parents would have to spend more for their children education. In addition, the quality of Indonesian education is still lack compared to those neighboring countries. President Joko Widodo believes that startups has the ability to solve these issues by using technology. Within few years, these edtechs demonstrated that they could accelerate what the government has been doing since mid-1970s, making learning more accessible and fun using technology.
The Insider Stories offer insight on Indonesia's economy. We provide a global reference for industry intelligence, news, information and data. We are the bridge that connects investors, the business community and policymakers. We are active across digital and events.