EdTech: A post-pandemic thesis
Problem
According to the National Report Card (NAEP), 50% of elementary students are not proficient with their mathematical ability. The pandemic has brought to light the fundamental issues with learning remotely. Education retention is reducing, making it hard to keep students engaged across all education levels, and more importantly it's becoming increasingly hard to identify the gaps in student learning.
Outlook
“268 billion will be spent on education technology globally this year. We are living through a watershed moment where the adoption of online learning has radically accelerated, and this mass shift in teaching & learning has exposed the deficiencies in current technology platforms” — Rethink Education, 2020
1.6Bn students and teachers have graduated to online learning; Pre-Covid, 30% of students took a class online whereas now 100% of students have moved either online or hybrid.
Technology has enabled multiple version of learning platforms — Massive Open Online Courses (MOOCs), virtual classrooms, personal learning environments (PLEs), Learning Management Systems (LMS), and Open Education Resources, has enabled the growth of the sector.
The ‘forced’ adoption of app-based EdTech and incorporation of artificial intelligence (AI), robotics, and machine learning potentially allows for the personalization of experiences and learning outcomes.
Market Size
K-12 market opportunity is approximately 8.15Bn and 35Mn students
- The global education and learning analytics market size was valued at USD 17.01billion in 2018 and is expected to grow at a compound annual growth rate(CAGR) of 17.4% from 2019 to 2025
- The U.S. comprises 43% of the total number of EdTech companies globally — with an increased focus on developing tools for public and charter school systems
First-time customers that tried online services will continue to be users post-pandemic
Associated Risks
EdTech largely deals with the following product and business-related risk:
- Lack of understanding of public school/university systems; inadequate go-to-market strategies
- Lack, of course, material innovation; no inclusion of teachers as ‘hires’ in startups
- Sales cycles for products — institutional elements are rigid
- Increased safety and privacy concerns with digital emphasis and online impetus
- Student risk; isolated learning and increased anxieties
- Product stickiness — customer willing to try different products and change quickly
Competitive Landscape:
Company to look out for — Boddle Learning
EdTech is a space that is impact-driven, tangible, and seeing a massive uptick in adoption across the value chain due to COVID-19. Consumer adoption has been brought forward by a magnitude of 5–10 years, lowering customer acquisition costs and driving a great deal of staying power and habit formation in the minds of consumers.
Boddle sits in a niche segment that targets early-stage development, which many believe has to be the focus in a post-pandemic environment, given the changes to school learning, and family dynamics. By creating an SDK, Boddle allows for content publishers to either partner with, or later, potentially purchase the tool in order to gamify existing content. Boddle learning has seen immense growth in the past year, and in a sticky market seems to have a productive approach to their enablement and marketing customer acquisition strategy.
Conclusion
The last year has brought about greater adoption of app-based EdTech and the incorporation of artificial intelligence (AI), robotics, and machine learning allow for personalization of experiences and learning outcomes. First-time users of digital products are likely to continue even post-pandemic.
EdTech will continue to be a challenging yet high-impact arena as learning inequities have increased, giving rise to marketplace opportunities will continue to exist, and because traditional university fees have increased considerably higher than CPI — forcing institutions to pivot to more accessible forms of product.
There remains an increased potential for cross-curricular learning opportunities and impact creation opportunities — Global spend on digital education is only 4% of total expenditure in education (inc infrastructure). Dedicated VCs focused on EdTech provide an opportunity for follow-on downstream capital — edtech is not simply an impact play, it's clearly a good business case.
Additional megatrends from one of my favorite funds to follow — thread
