EdTech: is this the beginning of another boom?
The way in which individuals acquire new skills and knowledge is evolving. Are you an auditory learner struggling with a new language? No problem, Busuu is a business that can connect you to a native French speaker in minutes; or perhaps kinaesthetic learning is more your bag; how about being sent the components to build your own computer by Kano Computing on which you then learn to code? Or finally you may be a visual learner, in which case you can now access high quality content delivered directly to your mobile, tablet or laptop in seconds, with tasks allocated and progress monitored remotely. Whichever category a learner may fall into there is now a suite of products and services to both engage and maximise results, and perhaps just as significantly, the ability to achieve these results is no longer dependent on being in the same room as the teacher.
Unsurprisingly then, the opportunity for EdTech businesses is enormous. It is estimated that total global education expenditure will reach $8tr by 2025, of which EdTech expenditure is expected to contribute $341bn, double the current value¹. There are two key enablers of this opportunity: significant improvements in technology infrastructure and sweeping cultural change.
Drivers of change
Reliable and fast access to EdTech platforms outside of the workplace or school environment has been made possible by increased access to high speed internet (83% of homes across the EU member states had next generation access broadband in 2019²); the availability of cheap cloud services by companies such as IBM and Google that underpins the SaaS model that the majority of EdTech businesses now offer; and improvements in the technology stack itself that has enabled entrepreneurs to create software platforms with highly engaging user interfaces that can also be fully integrated with a learning management system (LMS) that tracks and records completion of learning.
over half of corporates in the UK and US now using e-learning platforms for delivery of more complex skills
Indeed the widespread uptake of LMS by large corporates has been a key step in increasing the reach of EdTech, initially to deliver compulsory, company-wide training – increasing employee engagement with mandatory compliance training is a key differentiator of the more successful e-learning businesses - however the technology is capable of so much more. LMS is now being used to deliver personalised, professional development and technical skills training, with over half of corporates in the UK and US now using e-learning platforms for delivery of more complex skills, such as sales, marketing and data analysis³.
Therefore, although the popularity of EdTech products and services has been increasing, change is often a gradual process unless there is a significant event that forces increased adoption such that it becomes ingrained in daily life. Currently such an event is unfolding as a huge proportion of the world’s population is under some form of lockdown due to the COVID-19 pandemic, and with a vaccine widely reported to be 12-18 months away, it is likely restrictions on movement will continue for the foreseeable future. This is both an enormous challenge to government and society, but also an unprecedented opportunity for EdTech businesses with the software to deliver learning to the homes of billions of consumers, as exemplified by Busuu, the B2C AI-powered language learning platform based in London, reporting revenues that tripled when compared to pre-outbreak levels in both Italy and China as both countries endured strict lockdown periods.
appetite of private equity and venture capital to invest in this high-growth and fast-moving sector.
Global investment in EdTech companies over the last two years has totalled €32bn, which is more than the total combined investment made into all EdTech companies over the preceding 20 years, underlining the appetite of private equity and venture capital to invest in this high-growth and fast-moving sector. This unprecedented level of investment is not just limited to unicorns; Emerge Education, a London based investment firm focused on EdTech, has closed its first seed fund of €11.3m (£10m), and will invest up to €284k (£250k) in pre-seed and seed companies across Europe, providing a crucial source of funding for the next generation of innovative EdTech entrepreneurs.
1. HolonIQ 2019 Global Education Outlook
2. European Commission – Digital Economy and Society Index Report 2019
3. CiL Education Investor