India has nearly 159 million children below the age of six, according to the 2011 census. A major part of this age group lives in rural India and has access to only the Anganwadi system - a government-run system that provides pre-school services besides providinghealth and nutrition services. Needless to say, not many in rural India have been accustomed to any other form of preschool education.
P Naveen Kumar, 36, and Nimisha Mittal, 35, who were in college together were not the first to notice this gap in the rural education system. But they might just be one of the more effective ones when it comes to plugging that gap.
Kumar's first attempt at overcoming this chasm came about while he was working at Career Launcher (now known as CL Educate Ltd), Hyderabad - an education services provider-for their Rural Pre-Schools initiative in 2009. "This system closed down in 2010, owing to the challenges in the market," says Kumar. Here, he had seen that most children had no school readiness when they joined Class 1.
"Most people in rural India do not understand the need for pre-schools. Most families send their children to schools beginning from Class 1. These children have to get accustomed to the joy of learning before joining regular schools to make the most of it," says Kumar, whowith Mittal began the journey in 2010 by taking independent charge of three of the schools (run by Career Launcher earlier) in Ranga Reddy and Nalgonda districts of Andhra Pradesh (AP). In 2011, they formally started Sudiksha Knowledge Systems in Hyderabad and also set up three schools in rural AP.
According to Kumar, most of the children at these schools came from families that are at the bottom of the pyramid and due to a lack of understanding among them about the concept of pre-schools, he was forced to look elsewhere for scaling up Sudiksha. Kumar and co-founder Mittal however were clear that they wanted to deliver this service only to thebottom of the pyramid customers.
Retooling the model
After carrying out surveys in urban slums, the duo found that most slum dwellers couldn't afford to send their children to a pre-school but they had an understanding of the concept of pre-schools.
Kumar realized that, "People were willing to pay Rs 400-500 to send their children to pre-school." They then looked at developing a low-cost, scalable model so that children from urban slums could attend pre-schools.
Having tried running pre-schools before, Kumar understood the challenges involved, the first of which was finding people to manage these schools. "We wanted to make teachers partners in the process of managing the pre-schools, but often, the teachers were not qualified to take on this responsibility," he says.
The team at Sudiksha then engaged mothers of children from the slums to overcome this problem by making them entrepreneurs. "We decided that the school in-charge would be given a 10 percent stake in the school," he adds.
According to Kumar, the women being picked for being entrepreneurs were mostly unemployed but were qualified enough to teach pre-school students. They were trained for a week before the responsibility of running the school was handed to them. "We faced challenges with this model. A week's training wasn't enough for teaching them various aspects of enterprise development," says Kumar.
This has prompted Sudiksha to build a more detailed training program, which when complete, will comprise of 200 hours of training over a few months. Until then, Sudiksha is continuing with its existing training program of a week.
Frugal but effective
Calvin Clark of Gray Matters Capital, part of the Gray Ghost Ventures based in Atlanta, US that invested in Sudiksha in April 2013, says, "We invested in Sudiksha because it impacts the education space in India, works with women and creates livelihoods. This venture helped us focus on these three impact areas that we look towards supporting."
Another aspect of the venture that Clark appreciates is that the company has tried to build the venture in a cost effective frugal manner. According to Kumar, the team is trying out various models so as to establish every pre-school as a profitable unit. These schools require 45 students for two years paying a fee of Rs 400 per month to break even, saysKumar adding that school premises are also used for tuitions and day-care facilitiesto help bring in additional revenue.
Kumar tells us that each school requires an investment of Rs 80,000 while setting up and an operational cost of Rs 1.25 lakh for one and a half years, which has so far been invested by Sudiksha. However, Kumar is trying to tie-up with microfinance institutions and other government schemes to help the teachers raise the money to set up a school themselves.
More to come
Sudiksha was set up with an initial investment of Rs 20 lakh from the founders followed with another tranche of Rs 30 lakh in 2011. In 2012, the Eleos Foundation based in Santa Barbara in the US invested Rs 26.5 lakh after which Grey Ghost Ventures First Light Fund invested in the company's second round of raising investment. The company clocked aturnover of Rs 29 lakh in the year ended March 2013. In 2012, after it started working with the women from the slums, the team set up a total of 12 pre-schools in Hyderabad while continuing to run six rural pre-schools.
"Out of the 12 schools, three didn't do well, but six are expected to breakeven this year. If we can show that the schools are profitable, more women will be encouraged to invest in setting up the schools," says Kumar. Including the schools started this year, Sudikshacurrently runs 20 pre-schools in Hyderabad and six in rural areas.
Kumar and Mittal's efforts have so far brought pre-school education to 2,500 children. Kumar says that he aims at opening 200 schools in three years and will first target other cities in Andhra Pradesh.
As the company scales, Clark feels it will face challenges in terms of marketing as more and more people will have to be convinced of the need for pre-schooling for children. But Clark is hoping from a push from other players in the industry. So that as the education sector in India grows, so will Sudiksha.
This article first appeared in Entrepreneur India magazine
Updated Date: Apr 03, 2014 13:42 PM