Menterra has announced its first investment in the education sector – Leap Skills Academy, a skill development organisation headquartered in Delhi. Menterra’s equity funding will help the enterprise strengthen its core offerings and expand its operations to new regions; the enterprise will also receive support through senior advisors who will provide strategic guidance to the business.
When it comes to skills development and employment opportunities for youth in India, there exist many challenges:
• Students are graduating from schools and colleges without the skills necessary for their first job (across sectors)
• Students often have limited awareness about career opportunities available to them
• Aspirations are deeply influenced by societal trends and there is often a mismatch between student aspirations and opportunities available
• Employers are often unwilling to pay a premium for skilled workers
• Finding high quality trainers outside large cities is a challenge
• Skill training institutes allow school drop-outs and others from low-income households to pursue technical and soft skills that will enable them to increase their earning abilities
With increasing government focus on skilling millions of Indian youth within the next 5-10 years, the skill development sector is growing fast, and is seeing many new private sector players entering the market.
“However, private and public sector skill providers have focused on creating courses without understanding student demand, and in doing so, have failed in actually getting students into the workforce. Unutilised capacity is a huge challenge for skill providers, placement rates are low in leading colleges, and once placed, workforce attrition in India is a high 25%,” says Megha Aggarwal, who has co-founded Leap Skills Academy along with Ankit Durga.
LEAP – which stands for Learning, Employability and Progress – aims to bridge the gap between the skills that students have and those that employers require in the hiring process. They do this by researching the needs of a region, in addition to understanding the hiring criteria of employers, developing content and training that is aligned to employer requirements and providing both life-long skills as well as sector-specific skills, to allow students to create careers of their own choice.
“What’s really exciting about the work we do is that we get to see the lives of our students change when we do our jobs well. They are already passionate and motivated, which makes it an absolute pleasure to work with them. These students come from low-income families in small towns with access to limited opportunities – seeing a job offer letter in their hands after this program is what keeps us motivated. Through this process LEAP gets to be a part of their stories,” said Aggarwal.
Launched in 2013 with a pilot batch of 60 students, the company now operates in over 10 institutes across three districts in Haryana, and is expanding to four more districts this year. Since its launch, the enterprise has worked with over 1000 students in a variety of courses, with approximately a 90% placement rate for students who complete their employment-linked skills training programs.
“This company represents the kind of enterprises that Menterra was founded for and seeks to support – a strong entrepreneurial team that has demonstrated a keen understanding of the sector and speedy and effective execution on the ground; a deep commitment to creating impact for students from low-income backgrounds; the ability to experiment with a variety of modules in order to build the most effective training programs; and a resolute desire to build a sustainable and scalable social business,” says Mukesh Sharma, Managing Director, Menterra.
Menterra has co-invested in Leap Skills Academy along with the Artha Venture Challenge. The funding will be used to refine the business model, enable key hiring and expansion of the team, refine and grow the training content available and increase operations to 5 more districts within the next year.
“We have recently begun investing in companies focused on skills training and we are so pleased with the caliber of this team and its leadership. It is a privilege for us to support an endeavor that makes a real difference in the lives of young people, and the deep strategic and investment alignment with our partners at Menterra could not be emerging at a better time,” said Audrey Selian, Director, Artha Initiative of Rianta Capital Zurich, which has co-invested in Leap Skills.
The education startup space is fast growing with more companies focussed on skill training solutions for the poor given the government’s focus on vocational training as well. In 2015, there were 18 impact investments in education, eight of them between $100,000 – $500,000 (Rs 65 lakh to Rs. 3.25 crore); one-third of them in the K-12 segment. Most recently, Villgro has funded Vahan, an education startup developing a tech-enabled platform for teaching English to low income adults.
Launched in January 2016, Menterra Social Impact Fund I is an impact investment fund that invests in early-stage social enterprises working in the sectors of education, health, and agriculture. It offers startups funding of Rs 1 crore to Rs 4 crore at the critical early stages of a business, where there is currently little funding available. Menterra collaborates closely with social enterprise incubator Villgro to support and fund for-profit social enterprises operating in India.