US EdTech Investment Trends Entrepreneurs Need to Know in 2021 Matthew Johnson, Cooley
That 2020 was a watershed year for the future of education and work is likely an understatement. Globally, investment in “edtech” continues to accelerate. Venture capital investment in edtech, according to the team at HolonIQ, reached over $16 billion in 2020 globally, nearly double the level of the prior year and up 32x from 2010. Much of this growth has been the result of massive interest in China and India. But while investment in the US has accounted for a smaller percentage over time, the real dollars involved are quite robust. $2.5 billion was invested in the US in 2020 up from $1.7 billion in 2019.
At the same time, the challenges of virtual school and remote work, not to mention concerning levels of unemployment and uneven economic impact due to the COVID-19 pandemic, have put a spotlight on both the promise and shortcomings of current US educational and career readiness efforts. But, as hope is on the horizon for a return to a “new normal” with the introduction of new and promising vaccines, what will that normal be and what role will edtech companies play?
In many ways, the US presents an attractive market to European startups to scale and grow in impactful ways. So, what do investors think this future will look like and what are they excited (or wary) about? We asked a few investors to share their insight with us:
Jean Hammond, General Partner at LearnLaunch Accelerator, on the excitement around consumer-focused offerings: “Bootcamp and other employment-oriented funding may do well but that consumer products focused on Pre-K and K-12 might or might not face a crowded and confused market.”
Benoit Wirz, Partner at Brighteye Ventures, on why he is bullish about consumer-focused offerings in Pre-K and K-12: “Distance learning or after-school tools that enable parents to give their children an advantage in literacy and numeracy in in pre-K and 6th Grade, will finally find broad product market fit, with parents' willingness to pay increasing significantly to offset the disruptions to regular schooling caused by the COVID crisis. We will see at least one new unicorn/IPO in this space in 2021 from a company surpassing $100m in annual revenues. This will also spur a host of new generation offerings tackling this sub sector, leveraging new AI powered solutions.”
Ian Chiu, Partner at Owl Ventures, on innovation in skilling and reskilling in the workforce: “The rapid and ongoing change in the market – whether driven by technology, automation, or pandemic – puts a premium on employers, universities, and learners to focus on skills attainment and skills validation. It is no longer sufficient in this day and age to rely on a degree to be the sole signal of one’s capabilities in the market. Companies and institutions that are able to help stakeholders assess skill levels, develop competencies, connect with mentors, and bridge skill gaps will be increasingly in demand and sought after by customers and investors alike.”
On January 28th, we’ll reconnect with these investors and other leaders to dig into these predictions and more.
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