For India’s education sector, 2025 marked a significant yet subtle turning point. After a prolonged correction following the 2021 funding peak, the year represented a shift, not back to exuberance, but toward selective confidence. Capital remained cautious, valuations stayed grounded, and growth narratives were repeatedly tested against fundamentals. Yet, beneath this discipline, demand remained resilient and structural change accelerated across sub-sectors.

Based on insights from India Education Sector: 2025 Year in Review and Outlook for 2026, this article highlights the key themes that defined the year and outlines what they signal for educators, operators, and investors as the sector moves into 2026.

2025 in Context: Stabilisation Without Exuberance

The defining feature of 2025 was stability returning without speculation.

Roughly 85 education transactions were recorded during the year, with just over $580 million of capital raised. While funding levels remained materially below historical highs, the pace of decline moderated meaningfully compared to 2023 and 2024. More importantly, the nature of capital changed. Investors were no longer underwriting category creation or aggressive growth stories; they were underwriting execution, governance, and durability.

A few clear patterns emerged across deals closed in 2025:

Capital concentrated around platforms with visible paths to profitabilityLate-stage funding remained limited and highly selectiveGovernance, regulatory alignment, and compliance emerged as valuation drivers rather than hygiene factors

In many ways, 2025 was less about recovery and more about resetting expectations for founders and investors alike.

Capital Markets and Deal Activity: Fewer Deals, Higher Conviction

Funding Activity Stabilised, But Structurally Reset

Across stages, funding volumes remained muted, reflecting a deeper recalibration rather than a cyclical slowdown.

At the early stage, investors raised the bar sharply. Companies that attracted capital demonstrated:

Clear product–market fit and repeat usageCapital-efficient models with shorter payback cyclesEarly visibility into operating leverage

AI featured prominently across pitches, but investor interest materialised only where it translated into measurable cost reduction or outcome improvement, rather than as a standalone narrative. Fundraising timelines lengthened, and insider-led rounds became more common.

At the late stage, the reset was even more pronounced. Growth capital was scarce, and large checks increasingly came in the form of:

Structured capitalMajority or control transactionsDownside-protected instruments

With IPO optionality remaining weak, late-stage investors underwrote businesses assuming longer private ownership horizons and deeper operational involvement.

Consolidation Moved From Opportunistic to Structural

One of the most important shifts in 2025 was the acceleration of M&A as the dominant mode of capital deployment.

Consolidation was driven by a combination of factors:

Rising regulatory and compliance costs making scale criticalLimited access to growth capital for sub-scale operatorsDemand concentrating around trusted brands and platforms

Strategic buyers and scaled platforms used acquisitions to build networks, acquire capabilities, and unlock operating leverage, often at reset valuations. M&A increasingly replaced independent scaling as the preferred outcome for many education businesses.

Public Markets Sent a Clear Signal

Public markets played a significant role in shaping sentiment during the year.

A record number of education companies accessed stock exchanges in 2025, reinforcing investor preference for:

Regulated and degree-linked modelsPredictable enrolments and cash flowsPlatform-led, asset-backed businesses

At the same time, discretionary and consumer-led edtech models continued to face multiple compressions. Public market performance effectively reset valuation expectations across private markets, anchoring them to earnings visibility rather than growth narratives.

The implication was clear: IPO feasibility weakened, and strategic M&A emerged as the dominant exit pathway for scaled education assets.

Sub-Sector Deep Dives: Diverging Trajectories

While often discussed as a single sector, education in 2025 displayed sharply diverging trajectories across sub-segments.

Pre-K and K-12: Platforms, Premiumisation, and Demographics

K-12 remained one of the more resilient pockets within education, particularly for premium and platform-led models.

Key themes that played out through the year included:

Organised preschool and K-12 chains gaining share from unorganised operatorsPlatform and network models (hub-and-spoke, franchise, managed services) outperforming standalone schoolsContinued premiumisation driven by international curricula and differentiated pedagogy

At the same time, slowing growth in the school-age population emerged as a long-term structural headwind. As a result, the focus for operators is shifting:

From aggressive greenfield expansionToward enrolment stability, utilisation, and operational optimisation

For investors, multi-school platforms with shared services and brand leverage increasingly represented the lowest-risk way to access K-12 exposure.

Higher Education: Reform-Led Momentum Builds

Higher education was among the clearest structural winners of 2025.

India emerged as a preferred destination for foreign university branch campuses, supported by regulatory enablement and policy clarity. Private universities continued to scale across campuses, programs, and geographies, while new-age higher-ed institutions sustained momentum — albeit under increasing scrutiny.

Key developments included:

Heightened regulatory focus on degree nomenclature, faculty quality, and governanceIncreased attention on placement claims and outcome disclosuresGrowing demand for compliance-ready operating models

As institutions professionalised, a new higher-education enabler ecosystem gained prominence, spanning:

Admissions and CRM platformsAcademic ERP and regulatory compliance systemsCurriculum and delivery partnersStudent experience and outcome analyticsEmployability and industry partnership platforms

The VBSA Bill 2025 further reinforced this trajectory, signalling a shift toward unified regulation, accreditation-led autonomy, and higher accountability across the sector.

EdTech: Outcomes Over Content

EdTech continued its structural reset through 2025.

Funding volumes remained a fraction of peak levels, reflecting a recalibration of what constitutes investable education technology. Capital favoured businesses with:

Predictable revenuesInstitutional integrationClear monetisation and retention metrics

M&A increasingly replaced primary funding as the preferred deployment route.

Segment-wise divergence was stark:

K-12 edtech funding declined sharply, with capital shifting toward school-embedded platformsHigher-ed edtech stabilised around infrastructure, financing, and discovery-led modelsSkilling and upskilling proved relatively resilient, particularly employability-linked and sector-focused offeringsTest prep continued to consolidate around a limited set of scaled, hybrid incumbents

Across segments, scale alone was no longer sufficient — outcomes and distribution mattered more.

AI in Education: From Experimentation to Infrastructure

If earlier years focused on experimentation, 2025 marked the year AI became core infrastructure across education.

AI use cases expanded rapidly across:

Content creation and personalisationAssessment, feedback, and progress trackingStudent support and tutoringFaculty enablement and classroom management

Investor perception also matured. AI was no longer rewarded for novelty, but for its ability to:

Improve marginsIncrease engagement and retentionDeliver measurable learning outcomes

In several cases, AI disrupted incumbent advantages, reinforcing the idea that technology is now table stakes rather than a moat.

Global Perspectives: Discipline Is the New Normal

Globally, education investment remained selective and scale-led.

The US continued to see capital retreat from B2C edtech and test prepChina’s education market remained constrained by regulation rather than demandEurope showed relative stability, anchored in vocational and workforce-aligned education

Across regions, capital increasingly gravitated toward “real assets” — schools, financing platforms, professional education, and regulated institutions. For India, this global recalibration enhanced relative attractiveness, positioning it as a long-duration education market.

Outlook for 2026: Discipline Will Compound

Looking ahead, 2026 is likely to reward clarity of purpose.

We expect:

Capital to remain selective and conviction-ledConsolidation to accelerate across fragmented sub-sectorsRegulatory clarity and governance to increasingly influence valuationsAI to deepen its role across delivery and operationsLong-term value to shift toward platforms, outcomes, and execution

The correction phase is over. What follows is not an excess return, but a more mature, institution-led phase for Indian education.

LoEstro Advisors is an investment banking firm specialising in sell-side fundraising and M&A advisory, along with a strong consulting arm. Recognised as the #1 financial advisor in education in India, we are the advisor of choice to India’s blue-chip education businesses.

Over the last six years, we have grown to be one of India’s largest (in terms of M&A transactions) homegrown boutique investment banks, with $1.5bn+ worth of combined deals closed across education, healthcare, consumer, and technology sectors.