Key Takeaways

2020 will be remembered as the year that education changed forever — or, at least it should be.

Though the majority of EdTech investment has been in the US, according to AGC, China and India actually represent the fastest growing markets [1], which you may expect given the relative population growth rates. Vast and fast-growing populations call for modern ways of incorporating technology to provide education to the population en-masse. In a similar vein, Asia is closely followed by Africa and Latin America in terms of growth rates by region.

Europe is catching up, too. Between 2014 and 2018, the continent saw $1bn invested in EdTech companies, with a record high $450m in 2018 [2]. While the UK and the Nordics have historically dominated the market, Germany, France and Spain are emerging as new leaders in the sector.

It’s worth noting that what we refer to in this research as the education sector is actually a multitude of smaller segments of education that are ultimately very different from one another — pre-school (Pre-K), primary and secondary schooling and sixth form (K-12), higher education and corporate learning.

There are three sets of challenges that explain why EdTech represents such a small proportion of the global education market.

Numerous stakeholders

Relative to other industries, the education sector has a multitude of stakeholders: teachers, students, local authorities, policy makers, parents, administrators, faculties, recruiters and employers. The more stakeholders, the harder it is for an EdTech company to find the right business model. This explains why so many companies are resorting to Freemium models [1], offering a free version of their products and hoping to monetise by up-selling a ‘Pro’ subscription to the most engaged users in order to avoid the potential lengthy B2B sales cycles.

Logistical challenges

The ever-increasing number of to-be students means there’s always a shortage of teachers. This means that education has to become standardised — like following a national curriculum — to enable access to the masses. Personalised education is unscalable due to the scarcity of teachers therefore students must fit in with the national curriculum, not vice-versa.

As Alex Kroll said here:

The more standardised mass education gets, the less efficient it becomes; therefore, the real challenge lies in how to scale a personalised approach to education considering the existing number of teachers and educators.

Defining the value of education

A few decades ago, universities had a monopoly on content, with students only being able to access information and knowledge through university libraries and resources. Nonetheless, with the rise of the internet and the information age that we’re living in, the fees that students pay are no longer to access content: it’s to receive curated content [here]. Given the overwhelming amount of content and readily available resources that students can access online, the value of content provided by universities is falling. While there clearly is a lot of value in universities providing and curating relevant educational content, the quantification of the value may be different to what it used to be. The challenge for educators is to demonstrate that they’re not only content distributors, but they’re content curators and ‘augmentors’.

With crisis, comes opportunity. Covid-19, supplemented by the availability of new technologies such as AR, VR, as well as the almost complete switch to mobile, have given opportunity for breakthrough companies in the education sector to innovate.

Tech can help free up teachers to focus more on what they do best — teaching. As learning becomes more and more tech-enabled, technologies can take on some of the teachers’ workload in areas such as marking, homework and general admin. This could then help solve the problem of overworked for teachers and potentially pave the way for more personalised, high-quality teaching.

Learning to Earning

Personalised Learning

An education system that bases students learning abilities on their year of birth is clearly outdated and doesn’t take into consideration the uniqueness of individual learning patterns. That system was optimising the resources available, both in terms of infrastructure and educators, but today’s world looks very different. Whilst the ratio of teachers per students isn’t improving, students now have the opportunity to have a more personalised learning experience thanks to artificial intelligence. Companies are leveraging artificial intelligence to understand learning patterns and adapt content to optimise the individual’s learning. Other startups are using technology to understand and ‘diagnose’ why students are making certain mistakes, identifying learning gaps and misconceptions and correcting them efficiently. This way, teachers can offload some of their workload to technology and focus on improving students’ learnings.

Hybrid Education

Fin-EdTech

On the one hand, companies offering student loans are becoming more sophisticated, using complex algorithms to take into consideration factors such as education, employability and grades to offer loans to students-to-be that don’t necessarily have the opportunity to access to traditional financial resources, but have all the characteristics to succeed in their career. On the other hand, there’s a new generation of start-ups toying with the concept of Income Share Agreements. ISAs have the opportunity to shift paid education as we know it. Students would be able to study for free, and universities would be economically incentivised to recruit the best students and equip them with the skills employers need. Students would end up taking a bet on themselves, and the job market, and the value of education would ultimately be a fraction of a salary.

There is no right or wrong option: the current system is flawed and needs to be solved, but will the new structures solve a problem while creating a further one? That is, will education only be valuable as a function of the job market? Or is there a vocational value within education, besides a profitable career? Society will have to first agree on the value of education, then find a systemic solution for financing it. It is also true that education is becoming so varied that there can be many different solutions solving different parts of the education spectrum, rather than a single one-size-fits-all.

Teacher-influencers

What teachers aim for is to catch — and retain — students’ attention, as that is what drives engagement and results: the best teachers have indeed always been those who could grab and hold the classroom’s attention from beginning to end. As we move towards online learning, students’ attention has dwindled: students are bombarded with an overwhelming choice of content, and it’s harder to engage someone through a screen. However, this environment has created a great opportunity for teachers to take on the spotlight and become ‘influencers’, creating or curating high quality content and distribute it to a wide, highly-engaged audience. Throughout the pandemic, TikTok has seen a huge onslaught of teacher-influencers educating nations through short, engaging videos, demonstrating how impactful and valuable non-traditional teaching styles can be.

With corporates increasingly looking to up-skill their workforces, there’s also a huge opportunity for businesses that are creating new lessons and content that reflect what corporates are looking for: potentially collaborating with them for a more streamlined approach. Similarly, in an age of constant information overload, we’re looking for companies that are allowing companies and businesses, alongside schools and universities, to distribute and commercialise their knowledge and be recognised as educational institutions.

For any comments, thoughts, opinions and more exciting companies in this space, hit me up at cecilia@taliscapital.com.

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