January Edition of the X Report
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In this month's X Report, Cooley shares insight into US EdTech investments ahead of the EdTechX Spotlight and EdTechX announces the new Student Innovation Challenge. 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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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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Inaugural EdTechX Challenge Launch

EdTechX are pleased to announce the launch of the 2021 EdTechX Innovation Challenge — a virtual competition bringing together students and industry leaders to transform the future of learning and work globally.  

As the world becomes increasingly interconnected, it is clear that innovation rarely happens in silos; ideas aren't born from secrecy. The French mathematician Henri Poincaré once said: "great ideas rise in crowds." In other words, innovation thrives in spaces where diverse people from various disciplines can connect, exchange ideas and collectively dream up better ones. We believe that bringing people together to collaboratively ideate — from students to industry leaders, to academics and entrepreneurs— has the power to further connect the global learning community and catalyze innovation across the industry.

The challenge is aimed at students 18+ worldwide who are invited to form teams and brainstorm creative solutions to the biggest problems in education. Over the next three months, students will be asked to submit ideas, frameworks, products, or proposals within four overarching submission categories - Skills Over Degrees, Learning Management & Tools, Alternate Learning Formats and Collaborative & Community-Led Learning. 

In partnership with a selection of global partners and judges, we will then connect a select group of student finalists with a wide-spectrum of EdTech thought leaders at our Awards Ceremony held in May of 2021. Finalists and top teams will be eligible for prize packages worth $25,000+ from our sponsors including networking/mentorship, subscription/product credits, and internship/job opportunities.

If you are a student looking to participate in the challenge or an industry leader looking to join us as a challenge sponsor, register your interest here >

market round up header
Market Roundup Logos1-1
Education market round up
Tech Crunch - Education
EdSurge - Education
The Guardian - Education
Work market round up
Wired - Work
Forbes - Work
Fast Company - Work
investment market round up
Tech Crunch - Investment
Alpha Week - Investment
mint - investment
M&A Highlights
M&A Activity >
Tech Tarna - 1 pluralsight - 2
eThink - 3





Significant Fundraising Activity >
GSX - sig fund 1 Hackeru - sig fund 22
coachhub - sig fund 3



Valuation Benchmarks

Market Analysis and Key Trends 2020

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Global education investment has been mixed in 2020 due to the impact of COVID-19. From changing investor behavior to accelerating the need for EdTech solutions, it’s been a whirlwind year. Global M&A is down 29% from all the all time high of $29.7bn seen in 2019 but remains above the $18.2bn of M&A activity seen in 2016. Fundraising has faired slightly better, with a drop off of 2% in 2020 relative to 2019. North America dominated global M&A investing and the K12 sector earned the lion’s share of investment.bar chart 2The year saw the proliferation of SPACs as an investment vehicle. IBIS Capital listed their second SPAC, EdTechX Holdings, with the intent to invest in EdTech companies with an enterprise value between $400m and $2bn. Leading the fundraising pack was Yuanfudao, the Chinese company offering online courses and tutoring for K-12 students, raising $2.2bn in funding. This took its valuation to over $15.5bn and represented 10.8% of global fundraising activity. In global M&A we saw the Brazilian operations of Laureate Education acquired by Anima Holding for $1bn. The year closed out with another large acquisition as Pluralsight was acquired for $3.5bn by Vista Equity Partners, representing 16.6% of global M&A activity.

EdTech's total addressable market grew significantly at a rate of 39.3% from $163bn in 2019 to $227bn in 20201. This was supported by the education sector shifting to online learning almost overnight, forcing governments and institutions to support EdTech at an accelerated rate. This transition has shifted the perceptions and expectations for online learning and positioned the sector for significant growth at a CAGR of 16.3% from 2019-2025.

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The next wave of EdTech will focus on content delivery that creates a more engaging and unified multimedia learning environment. AI and machine learning will integrate directly into classrooms using tools like facial recognition to gather data, track patterns and optimise student performance. It will leverage this data to optimise and personalise each student’s learning path, delivering content effectively. This content delivery will happen through converging multimedia forms – from tablets to VR and AR.

The past year was one of change and adaptability. Adoption of EdTech accelerated whilst the broader education sector showed its resilience with a strong rebound following the initial COVID-19 impact ultimately resulting in a level consistent with 2019. The sector is well poised to continue strong growth into the year ahead with potential for an all time high.

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