February Edition of the X Report
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In this month's X Report, we look at how TikTok is influencing EdTech at Meten EdTechX and Wacom's approach to elevating digital learning. Each month, we will share a snapshot of key trends, showcase the stars of today and tomorrow, provide some food for thought as well as mergers, acquisitions and fundraising.

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Meten EdTechX: Mastering ELT Content for TikTok
Romy Tuin, EdTechX

TikTok, a short form, video-sharing app, was rated the most downloaded app in 2020 - with an estimated 57% of its users based in China, where the service goes by the name Douyin. With its monthly active users (MAU) expected to reach 1.2 billion in 2021, Douyin could create exciting new opportunities in the education sector.

In August 2020, Likeshuo, the online English Language Teaching (ELT) platform incubated by Meten EdTechX, established a TikTok multi-channel network and has been publishing short ELT videos delivered by internet celebrities ever since. Likeshuo has engaged over 200 of these internet celebrities, reaching over 300 million cumulative views as of January 2021. By leveraging their foreign teacher resources and providing ELT vertical video content, Meten EdTechX is well-positioned to enhance its brand awareness on TikTok.

TikTok’s large and growing MAU will likely provide Likeshou additional opportunities to increase brand exposure and, with its ability to attract a high volume of traffic, become a new growth point for the company. Unlike traditional marketing approaches, the experiential marketing nature of video content makes it more comparable with the lengthy conversion rates we see in sectors such as education. The use of front-end traffic from TikTok as a channel for communication, combined with short videos as an emerging traffic dividend, could help Likeshuo decrease the amount of time it would take to increase its customer base.

The demand for international communication has become more urgent than ever as China continues its globalization efforts. Thus, the high-end adult ELT market has tremendous potential. Compared to other sub-fields in the sector, high-end adult ELT addresses more diversified customer needs, like remote teaching and face-to-face interactions. Considering the recent positive developments relating to the COVID-19 vaccines and the recovery of China’s economy, the demand for international exchanges is expected to be gradually restored.

With Meten EdTechX’s launch of SVIP courses to address the ELT market laying the foundation for the growth of this sector, it also creates the opportunity to diversify its scope of services.

With further development of its digital platform and expansion of its learning centre to come in 2021, Meten EdTechX is demonstrating a commitment to improving the overall English language competence and competitiveness of the Chinese population to keep up with the rapid development of globalization.

Any opinions or comments expressed in the article are the personal views of the author and should not be construed as providing any form of investment advice on the merits or otherwise of the companies mentioned.

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Wacom and Chromebook Take Digital Learning to the Next Level
Faik Karaoglu, Wacom

Wacom is making it intuitive and easy to use pen tablets and displays available to the growing group of Chromebook users. The One by Wacom is now the first pen tablet to receive the Works With Chromebook certification which makes it an ideal tool for students, teachers, and young creatives and useful addition to many set-ups in class or at home.

Wacom has continued to expand its efforts to support the education sector with intuitive solutions that will create teacher and student-friendly technology in a digital classroom. Digitalization has great benefits for the education sector. But it has proven to be challenging. The new compatibility with Wacom pen tablets and displays has made creating, working and teaching digitally as natural and intuitive as possible and offers more possibilities to work with their Chromebook.

For Wacom to make it’s the transition to online teaching as smooth as possible, they collected a wealth of information and helpful tips on its dedicated Wacom for e-learning pages and partnered with five leading educational software applications. Collaboard, Explain Everything, Kami, Limnu and Pear Deck offer powerful interactive whiteboarding, video tutoring and online collaboration tools as learning and teaching shifts to the digital classroom. They are fully compatible with Chromebook and now part of Wacom’s dedicated education software bundles available for the One by Wacom, Wacom Intuos and Wacom One pen devices.

Combining the benefits of a One by Wacom pen tablet with the advantages of Chromebook offers students and teachers a valuable upgrade to their existing setup and provides schools with a worry-free solution – be it on-premise, in hybrid scenarios or for teaching and learning from home. Chromebooks give students, teachers and administrators a simple yet powerful solution for fast, intuitive, and easy-to-manage computing. They provide access to education and collaboration resources on the internet, offer centralized management and low total cost of ownership. Wacom is working with Google to expand compatibility to include additional Wacom devices and bring more pen tablets and displays to a growing group of Chromebook users.

Join the EdTechX Wacom Spotlight on Thursday 25th February, focused on remote learning tools for educators. You can read more about One by Wacom here >

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M&A Highlights
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Significant Fundraising Activity >
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Valuation Benchmarks

Spotlight on Education Giants: Insight into Billion Dollar Transactions

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One month into 2021 and EdTech is back in the news, with Byju’s, India’s largest online education startup, announcing the acquisition of Aakash Educational Services. The $1 billion deal marks one of the largest EdTech acquisitions in history, and with increased global awareness of EdTech continuing into 2021, is this the start of a year of record breaking transactions in the space? This month, we take a look at the trends around billion dollar education deals in recent years.Pie Charts 1

However, M&A and fundraising data tell very different stories. Billion dollar M&A transactions remain concentrated in the US where EdTech has been popular with private equity investors, such as Thoma Bravo which acquired Instructure in 2019 for c.$2bn (7.7x revenue), and most recently, Vista Equity Partners which acquired Pluralsight in late 2020 for c.$3.5bn (9x revenue). Another region to keep an eye on is Latin America – its young population and fast-growing education markets have supported rapid growth of education giants such as Cogna Educação, which has acquired four educational institutions in the last three years.

M&A sector spread has been fairly even overall, with the corporate training sector experiencing regular big-ticket deals as consolidation becomes a key feature of the space. The growing need for regular upskilling in today’s fast-moving business environment is attracting both established training providers looking to gain market share and HR companies looking to offer end-to-end talent management services and enter the increasingly lucrative training market. Leaders in the converging talent management space include LTG, with almost $400m in acquisitions in the last 5 years, and SEEK, with over $700m invested.
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Record-breaking fundraising tends to be concentrated in the Asia Pacific region. Asia’s share of EdTech venture capital investment has been steadily increasing to now, where it accounts for almost 80% of all Global EdTech investment1. K12 B2C products are the clear winner, with this trend being bolstered by extended periods of home schooling required in 2020 due to the Covid-19 pandemic. In 2020, China-based Yuanfudao became the most valuable EdTech company in the world after managing to complete three funding rounds of $1 billion each, bringing its total funding for the year to an incredible $3.5 billion (including additional smaller raises) and valuing the company at $15.5 billion. Just behind Yuanfudao is Byju’s, which is valued at $12 billion, and given recent news appears to have equally ambitious growth plans and may still raise a billion dollar funding round yet.

After a challenging and disruptive 2020, investor appetites are expected to be robust. A growing focus on emerging markets and tech-enabled business models bodes well for EdTech in theory, and companies with proven concepts should continue to raise massive sums. The really interesting part will be to see how EdTech providers innovate in order to stay relevant in a post-Covid world, and whether market expectations of a record-breaking 2021 will be met.

(1) HolonIQ

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