I’ve been pretty curious about the buzz surrounding EdTech, especially since the coronavirus pandemic hit. EdTech is popping right now – people are excited about it, entrepreneurs are working on ideas in it, and investors are looking to invest. It’s proved to be an interesting and exciting space to be in and is growing really fast – expected to reach roughly $350Bn by 2025, growing at a CAGR of 12%. Over the past couple of weeks, I tried to gleam as much information as I could about the industry – trends, major players, etc.
In my next few blog posts, I aim to talk about some stuff going on in EdTech, the impact the pandemic has had on various subsectors within education, and trends I observed/hypotheses I have for the future. The most important conclusion I draw is that this is a massive, complicated industry – studying it as a whole would neither result in accurate conclusions nor would it do justice to the nuances within different EdTech verticals. For this reason, I divide education into three categories – Pre School/K-12, Higher Education, and Online Learning/Skill Development – and will talk about each of these in a three-post series. These categories are neither mutually exclusive nor collectively comprehensive – there’s plenty of overlap between applicable technologies, and there are companies and verticals that don’t perfectly fit into these. Lastly, this post doesn’t aim to comprehensively cover all of EdTech but tries to dive deep into certain verticals I found to be particularly interesting.
Pre School/K – 12
Let’s start with Pre School/K-12. I think of companies in this space in two ways – B2B, selling to schools/institutions, and B2C, selling directly to children and their parents (think tutoring apps). There definitely are companies that do both and have more integrated offerings, but this is a simple way to think about general business models in the space. The K-12 market is really active right now, and a ton of great companies are doing things that I’m excited about.
Virtual School?
The coronavirus pandemic has forced educators and institutions to figure out a way to virtually continue school and keep children actively engaged with their learning. The first, obvious question raised is this – to what extent is virtual school going to be a sticky trend, continuing after the pandemic?
Before answering that, here’s another thing to note, independent of the coronavirus conversation. Home schooling is significantly on the rise in the United States. Over the past decade, the US DOE reports homeschooling has grown by 61.8%. A significant portion of that increase is attributed to the digital age, and the fact that virtual teaching makes it easier for children to get the education and learning needed without physically being at school.
So do I think virtual schools are going to last? Not really. Here’s what I believe. Companies that try to virtualize the core academic experience of schools are not posed to succeed. But companies that aim to facilitate the homeschooling experience through online educational resources, learning tools, etc. are. The difference between the two can better be understood when you break down companies into B2B and B2C as we did earlier.
Let’s start with the first of the claims. Here I talk about those B2B businesses that help schools take their offerings and courses online – similar to the OPM model in higher education. I’ll talk about this more in a later section, but I’m bullish on OPM companies in higher education, largely because they’re able to leverage the brand value of colleges to create attractive course offerings – that factor is just not present at the school level. Efforts to move current schooling online are surging because of the pandemic, but this doesn’t mean that once the situation subsides people will continue to be happy with online school – they want to be back in person. If they don’t and are satisfied with school virtually, they’d probably shift to a more traditional home-schooling system, which is easier to adapt and tailor to specific needs. At that point it probably doesn’t make financial sense for schools, already plagued by budget issues, to keep offering classes virtually.
On the other hand, companies that create virtual offerings aimed directly towards children, parents, or other homeschoolers (not affiliated or for high schools) are probably in better shape in the long run – in addition to a strong homeschooling trend, the pandemic has shown people who were probably initially skeptical of virtual education at the school level that it is possible. One company that I believe is well positioned to grow from these trends is ‘Outschool’. Outschool was founded in 2015, brands itself as ‘the marketplace of live online classes for K-12 learners’ and allows teachers to create course offerings primarily aimed at K-12 learners. Outschool initially grew via the California homeschooling networks, raised a Series A in early 2019, and is now witnessing a surge in demand because of the pandemic.
Another company that I’m bullish on because of these trends is ‘Tinkergarten’. Tinkergarten creates outdoor learning experiences for kids, bringing them together to create a social, creative learning environment. While there probably aren’t a lot of get-togethers right now, I like this company because parents are going to have to turn to increased ways of social interaction for their kids if the trend of home schooling stays strong the way I think it will. Tinkergarten’s offering is a great way for kids to stay social and not be completely lost in the virtual world we’re moving towards.
As a side note, in the debate between home schooling vs normal, I’m firmly in the camp of normal – parents enroll their kids in school not just to get an education, but to develop social and interpersonal skills which in my opinion cannot be achieved in any other settings. Having kids socialize in sports/virtually/other classes does not replicate the school social experience where you’re dealing with a host of social dynamics that you won’t in other contexts. But oh well, if the data speaks the data speaks!
Schools are reconsidering their syllabi, making curricular adjustments, and are modernizing
While schools probably aren’t going completely virtual, I believe that the modernization of school curricula brings interesting opportunities for entrepreneurs. In this digital age, the basic skills required to be successful in the job market have changed, and schools and school districts are taking notice. InventXYZ, a company founded by my friend and classmate at Penn Nikil Ragav, aims to capitalize on this very trend. According to Nikil, whose company primarily operates on the Philadelphia area, school districts are starting to get increased budgets to modernize their offerings by inculcating more technical education and new modes of instruction. This makes space for companies such as Accelerate Learning (introducing STEM curriculum in K-12) and DreamBox Learning (using adaptive learning to teach math) to convince schools of their value. Competition in this space will largely be determined by who gets to the available budget increases first, whose offering is most easily integrated into the school systems, and whose technology is the most effective.
In addition to curricular enhancement, schools are modernizing by embracing different kinds of technologies to deliver content. Along those lines, there are three primary technologies in this space that excite me the most –
- Adaptive Learning – Simply put, adaptive learning leverages AI/ML to tailor the educational experience to each individual child. Systems gain information on preferred mode of instruction, responses to different learning techniques, ideal levels of difficulty and adjust and adapt accordingly. Several companies such as DreamBox (mentioned earlier) and Quizlet are making interesting contributions in this space. While schools might be slow to adapt these because of $$, companies should develop their B2C offerings in the form of tutoring/external help (services that schools could maybe recommend) to supplement learning. I’m really excited about Adaptive learning becoming more mainstream – it’s posed to grow at a CAGR of 15%.
- Gamification – This refers to applying elements of games such as point scoring, challenges, competitions, etc to learning. Gamification in education has been widely researched and its value has been proven. Kahoot and Socrative are a couple of examples of companies that use gamification in education.
- Virtual/Augmented Reality – While less present right now, I’m really excited for the future of XR in education overall – I could see this revolutionizing any skill based or vocational training, and STEM education – imagine putting students in virtual environments to simulate real life labs or professional situations. This technology probably has the largest cost barrier – but as these technologies develop, hopefully the costs will drop. Check out Labster – a company working in this space right now.
These technologies don’t just have to be leveraged in a school/institutional setting – they are, can, and should be used in non-institutional, B2C settings – for example as learning apps, tutoring resources, and course supplements. Several companies, especially internationally in markets like India and China, are seeing massive success in this space – Byju’s, the Indian learning app, recently raised money at around a $10Bn valuation. While consumer markets come with their own large set of challenges, the B2C EdTech market is exciting as new technologies are resulting in new offerings, and companies are seeing large scale adoption with the pandemic. B2C companies also don’t have to worry about school budgets – but do have to deal with the competitive nature of consumer markets.
Coming back to schools – beyond the pure academic experiences, I’m curious about how other, administrative functions will change with technology. For example, ‘Bakpax’ is a company that aims to automatically grade hand written assignments – while I’m not too convinced on this concept (banking on hand-written tests in the future seems kind of strange to me) companies with similar missions to automate or simplify non value add (I’ll be visiting this term later) academic practices excite me. Another similar area that excites me is parent teacher communication, and how a community between teachers, students, and parents can be created virtually – parent teacher communication doesn’t need to happen in person. ‘ClassDojo’ excites me a lot in this area, as do more niche plays like ‘Remind’, that lets parents and teachers talk while preserving the privacy of their phone numbers.
All this said, I do think there’s a major issue that needs to be solved in this market, which caps the progress of these until solved – access. Technology is a double-edged sword, on one hand it spurs innovation and simplifies lives, but on the other hand it alienates those without the means to use these offerings to the fullest. While funding the education system helps addressing some of these issues, some of the companies and ideas I mention also rely on families having access to internet, means to own devices such as laptops or tablets, etc. I hope this decade brings with it increased opportunities to reduce the digital divide and position us to best leverage these technologies.