Deal focus: Going regional to fill the coding gap

Indian engineering universities deliver 1.2m graduates a year, but more than 60% remain unemployed, according to the All India Council for Technical Education. It smacks of an economic problem, but in fact, it’s a skills problem.

There is no lack of jobs for these graduates; India is projected to have some 5m computer science engineering openings by 2030. But computer science is not what students are learning.

The approximately 4,000 domestic engineering colleges only have the appropriate faculty for about 200,000 computer science and software graduates a year. The rest are focused on more conventional domains such as chemical, mechanical, electrical, and civil engineering. And while conventional engineering jobs have not disappeared, they now require more digital know-how.

“It was okay in my time, 20 years ago, because there were no chips in cars or air conditioners. There was no software,” said Anup Jain (pictured), a managing partner at Orios Venture Partners and a mechanical engineer by training.

“The demand was for engineers trained on steam engines and electric engines. Now there are chips and software in everything. You can convert non-computer science engineers into software engineers, but there isn’t a college like that.”

Not in the brick-and-mortar sense, anyway. Orios first invested in online computer engineering training platform NxtWave as part of a USD 2.8m seed round in late 2021 and re-upped last week in a USD 33m Series A led by UK-based Greater Pacific Capital.

Both of Orios’ commitments came from its third fund, which is the first vintage to combine seed-stage and follow-on strategies in a single capital pool. Funds I and II each closed on about USD 40m in 2014 and 2018, respectively, with a follow-on vehicle of USD 30m closing in 2021. Jain suggested that Fund III would close in the next couple of months, though he declined to specify the target corpus.

NxtWave offers engineers cohort-based courses across areas such as artificial intelligence, full-stack development, cybersecurity, virtual reality, and blockchain primarily via recorded lessons. The service also includes doubt-resolution tools with teaching assistants and peer-to-peer learning options.

Job placement is an important part of the package, with NxtWave claiming to have helped around 6,500 students from over 3,000 colleges find work with 1,250 companies. These companies range from start-ups to Fortune 500 members.

The bulk of India’s engineering colleges are said to have woefully low job placement rates for graduates of around 30%. NxtWave claims a more than 70% placement rate for its students, who are drawn from these very colleges.

It’s worth noting that the prestigious Indian Institutes of Technology (IITs) have a roughly 90% placement rate but are considered behind the curve in terms of computer science training capacity. There are only 23 IITs in India, and they produce about 16,000 graduates a year.

NxtWave claims differentiation in a crowded online education space with a model focused on financial and education inclusion. Whereas typical engineer training platforms are likely to lean toward pure English instruction and tier-one cities, NxtWave targets lower-tier cities with lessons combining written English with spoken instructions combining English with Telugu, Tamil, and Hindi.

In a country with a severe computer engineer shortage, wages tend to be high, which generally makes it expensive for an education start-up to hire the appropriate teaching talent. But the vernacular language angle is part of what makes this work at NxtWave.

Many engineers from regional areas have proven eager to return to their roots and give back to their communities – even if that means taking a smaller salary than they would receive with a large company in a tier-one city. They have experience in the big league but are looking for something deeper.

“They know what companies like Microsoft want, so they can build that into the curriculum. They also know your language, so they’re able to use a mixture of idioms and phrases in the right places, which gets it into your mind much faster,” Jain added.

“NxtWave appealed to engineers who find this to be more meaningful and purposeful. They don’t have to be cooped up in a small apartment in a bustling city running back and forth to an office and getting stressed out. People are touched by the cause.”

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• Topics
• South Asia
• Technology
• Early-stage
• India
• Orios Venture Partners
• Greater Pacific Capital
• TMT
• Education