April Edition of the X Report
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In this month's X Report, we focus on the COVID-19 outbreak and it's affect of education, work and EdTech markets. 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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The Great EdTech Acceleration
By Fergus Davidson, IBIS Capital

There are currently over 1.5 billion learners in 188 countries across the world affected by school and university closures across the world. That amounts to almost 91% of the world’s entire population of learners (pre-primary to tertiary education).

This forced closure of education institutions is driving rapid and widespread adoption of tech-enabled distance learning methods and, with global government guidance indicating months of lockdown, we have limited visibility on when students will return to classrooms and lecture theatres.

While the COVID-19 epidemic is driving exponential active user growth for businesses enabling and/or providing distance learning solutions, the key question we’re asking is which of these technologies and business models will stand the test of an eventual return to classroom teaching.

EdTech Solving all Challenges… For Free

To date, the major beneficiaries of school and university closures have been Asian edtech firms. Operating in markets with a more favourable view of technology in education and where parents have higher aspirations for their children, these firms have seen numbers of active users soar.

The Financial Times recently reported that Tencent-backed live online course provider, Yuanfudao, had crashed after 5 million people took up its offer of free live courses in response to virus lockdown. Days later, the business reported that it had raised a fresh $1 billion funding round in a strong show of investor confidence in the sector. Meanwhile, India’s $8bn-valued online tutoring leader, BYJU’S, experienced a 60 percent increase in users following the introduction of free access to its online courses in early March. Across Europe too, uptake has been rapid (albeit from a significantly lower base) as countless edtech businesses have rushed to release free offerings. In the UK, the BBC has launched the biggest online education push in its history to support the education of “every child” in the country.

The value of free online educational resources and tools cannot be underestimated at a time when incomes are being squeezed and jobs are being lost. Equity in access to educational tools and resources will be fundamental in mitigating negative societal impact. However, the altogether more complex issue of equity in access to computers and other devices remains. Can edtech solve this?

Long Term Sustainability?

Across both developed and emerging markets (where willingness to pay for online solutions is higher), the question will be the extent to which millions of free sign ups in a time of forced adoption will translate into paying users once normal service resumes.

One of the primary barriers to adoption of technology has been the resistance of educators, many of whom are inadequately trained to deliver teaching using technology. Within education and training a powerful legacy of the current crisis may well be the informal re-training of our educators in the skills and capabilities required to leverage the tools and technologies available; the longer that the current campus closures continue, the greater extent to which new behaviours and practices, including use of technologies, will become normalised.

However, many educators and learners are not paying for the technology solutions that they are currently reliant upon. When campuses re-open, this reliance will no longer exist, yet edtech firms will be wanting to monetise their new found customers. We will have to wait and see how this unfolds.  What we do know is that COVID-19 has accelerated the blended model, which empowers, not replaces the educator.

A Brief Reflection…

In our January report, Carla Aerts bemoaned the slow progress in the development of teaching methods:

“Fast forward around 200 years [from the Industrial Revolution]. The world is totally different, yet in education, not much appears to have changed. Classrooms and lecture theatres still look pretty similar…Whilst technological storms and digital disruption rage, the revolution appears to have stopped at the school gate.” – Carla Aerts, The X Report, Jan. 2020

That today, only weeks later, classes are being delivered via Zoom across the world (other video platforms are available!) is as much an indicator of the extraordinary times we live in as any.

Sources: UNESCO Global Education Coalition; Citi GPS, Education: Power to the People

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How EdTech Can Help in a Crisis Like This
By Priya Lakhani OBE, Founder & CEO, CENTURY Tech

On January 29th, I landed at Zurich airport to a message from my team asking if we can give our product away for free. To everyone. Everywhere.

This isn’t exactly what they teach at business school. We spent years and millions of pounds developing CENTURY. My team of engineers, teachers and neuroscientists worked long days and nights building technology that combined AI, learning science and neuroscience to provide the user with the most effective way of learning any content. Schools each pay us thousands of pounds for our services, while many governments procure our platforms for hundreds of their schools at one time.But these are not standard times, and social impact entrepreneurs are not standard businesspeople. At present, UNESCO says that 1.3 billion people are prevented from attending school or university due to the coronavirus outbreak. Over 130 countries – with 80% of all students – have closed schools completely, while many others have enforced localised closures that could soon become nationwide.

Since I received that message in late January, we’ve opened up our platform for free to any school and family who wants our help. In the early days of the crisis, when it seemed to be confined to East Asia, we set out helping closed schools in China and Hong Kong. The requests then came in from schools in Thailand, Vietnam, from across the Middle East, then Italy, then the US, then the UK – and now from every corner of the world. We then received hundreds of requests from parents, so we worked for three days and nights to create a seamless direct-to-parent application, which thousands of families signed up for on its first day.

We’ve been able to reach thousands of schools and families, with hundreds of thousands of children across the world now learning with the help of our artificial intelligence platform. Students are available to learn effectively from home by using our award-winning content, personalised to them by our AI engine. The data on their progress is provided to their teachers to inform their video call catchups with students.

So why did we do this? As a social impact company we have an obligation to help as many people as we possibly can. CENTURY was built to transform education. We’ve spent a lot of time helping Syrian refugees in the Middle East, which showed us how technology can be used to help during times of emergency.

We also decided to move swiftly because all crises require swift action to mitigate their harmful effects. These effects compound each day that they are not addressed. Each day of learning that a child loses can stay with them forever. The UK government claims that missing just a handful of days in a school year can damage a child’s exam results, affecting their future life chances. Without deploying a rapid and effective solution, we risk damaging the life chances of a whole generation.

Agile and nimble tech startups are well-placed to act as first responders in crises like these. We were able to make the decision to help immediately, with no bureaucratic hurdles to overcome. It only takes us minutes to set a new closed school up with our technology. Despite not being able to train each school in person, which is our usual approach, we’ve started delivering mass webinars that allow us to train dozens of teachers at once.

Crisis expert Steven Fink worked closely on the aftermath of the 1979 Three Mile Island nuclear accident in Pennsylvania, an incident that sparked global panic over nuclear power, setting the industry back decades. In his book ‘Crisis Management’, he advises that each crisis should be seen as a “runaway stagecoach”, with you as a passenger. You can either sit at the back, being “bumped and jostled and tossed from side to side”, or you can ride on top and take the reigns. While you might not stop it, you will be able to influence the “speed, the direction and the duration” of the crisis.

Education during the coronavirus is nothing short of a crisis. Entrepreneurs will not solve it alone – but we all have a social duty to use our innovations to help in whatever way we can.

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Across the world, we are feeling the effects of the COVID-19 pandemic. Country lockdowns and the forced closures of many schools and businesses are transforming the way we interact and disrupting daily activities. These disruptions are understandably taking their toll on the stock markets, with the S&P 500 and FTSE 100 sitting over 30% lower than at the start of 2020 and experiencing some of the worst trading days since 1987.

The fact that schools are likely to remain closed for an indefinite period is a huge source of concern for parents, and UNESCO predicts that the COVID-19 pandemic will impact the education of over 1.25 billion students across 124 countries. This however presents a significant opportunity for online education providers and we have seen a number of these providers launching new initiatives to support the surge in demand for alternative learning options. Kuaishou, a Chinese social video platform valued at $28 billion, is promoting online education offerings to compensate for school and university closures. The company and other video platforms have partnered with the Ministry of Education to open a national online cloud classroom to serve students.

EdTech stocks have also fared far better than the general market during the recent downturn. A number of Chinese EdTech stocks have actually traded at all-time highs, likely driven by the rising appeal of online education models and China’s investment of ~$174 billion into its markets in February in an attempt to stimulate its business environment and equities prices. Stand-outs include China Online Education Group (51Talk), Koolearn and GSX Techedu, which are up 162%, 82% and 83% respectively since the start of 2020.

Clear winners in these challenging times are businesses that can adapt to an online-only operating environment. EdTech adoption has accelerated globally, and the industry is likely to receive far more attention from both investors and learners in the months to come.

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