Investing In Early Childhood Happens To Be A Lucrative Business Proposition For Investors

Priyaanka Mathur Jan 15, 2019

The session brought interesting insights on how big investors and small groups today are investing in the country bringing back the most talked about subject in education scenario i.e Early Childhood Education, giving due stress on How children should learn with play and through different experiential methods.

Dr. Swati Popat Vats began the session with a common question to all the panellists asking, how appealing is early childhood education for the investors today, since they all already have franchise centres running across the country. How serious are early childhood education investor when they decide to invest in a pre-school and take a franchise?

Pritam Agrawal who heads more than 600 early childhood centres in Bangladesh and Nepal drew attention on the investors, “ I have seen across last two decades that it is still a good business proposition to be in. I have been to all parts of India and Bangladesh and found that still there is a need to have early childhood education especially in the rural part of India tier 2, tier 3 cities and small towns, still lack all the infrastructure support to develop early childhood education schools. So as an investor, I am there and I will be continuing in the industry for the years to come.”

Vats, “So when investors sign up a franchise are they actually serious about imparting education to kids or they are just looking at making money?’

Vittal Bhandary who is very strong in Karnataka and has over 100 centres and now plans to expand to Chennai, “ I think people are quite serious and most of them that we find are passionate about it as they think that they are contributing to the society. There are a lot of factors attributed to it as if we see the segment that we are talking about has a huge opportunity in India.”

Safari kids is operational in Mumbai, Pune and Bangalore and eyes on expanding in metros and mini metros.Jitendra Karsan talks about investors and how franchisees work for him, “We have a pre franchise model and investor come to us as we help them with partnerships. So we help them in investing wherein the results start happening not immediately. So the ROI period is three years at least since they are serious investors who are not looking at immediate returns as such”

Vats, “So what is the royalty model of Franchising and how lucrative was it for the investors ?”

Agrawal talks about finding new ways to attract investors thereby dropping conventional ideas to do business“ We started in 2005 and at that time a lot of brands worked on the royalty model. When we studied it we found that there was a percentage per child that was charged from the franchise and if the franchise was unable to have many students, they started losing interest in the business. So we decided to remove the royalty model from the system and instead charged a franchise fee from the investor, that helped both in the business.”

The session dealt with key issues like the revenue drivers from an operators perspective, and what are the misconceptions in the sector in terms of dynamics, expectations and returns that the investors have.

Vats, "So what are the challenges that investors constantly face and what are the revenue drivers?"

Karsan,” We are still very young in our brand life cycle. So a lot of investors think that we will make great money and quite quickly. That’s why we decided to do follow the partnership model, where we have serious long term seasoned investors who will go and invest in the stock market, mutual funds, or investing in housing industry etc. So the success of the last 3 years and growth has brought us similar sort of investors."

Agrawal adds, “Too fast too soon is a major drawback in the industry where we all talk about ROI and percentage in terms of Months, but this is not how the Education Industry works. When we really see the number of students in a franchise it is that what actually matters!”

Vats, “Do u think discount on fees is deteriorating the quality of education?”

Karsan, “Discounting is one word we don’t use. Education is something where we don’t discount. Franchises do have a discount on the education fee though!