Education, the backbone of both citizenship and economy, is imperative for individuals and societies worldwide.
Education is a huge market (1) with emerging needs (2) that technologies have the potential to meet will have an enormous impact (3). There is an growing Edtech market with specialized investors and successful startups (4) bringing change to all sectors of Education (5). We believe Edtech will prevail.
1. A market worth five to ten trillion dollars
IBIS capital estimates that the global education market was worth $5.8tn in 2016 and projects that it will rise to $8tn in 2020). Europe accounts for some 25% of the global market (i.e. $1.5tn in 2016 and $1.9tn in 2020).
The education market in the West accounts for 6% of GDP — more than the software & media industries combined! In France, the education market accounts to $156bn.
2. New needs emerge to adapt to habits and train both the future and current workforce
Education is a big market, but…so what? Quite simply, with less than 2.5% digital penetration (source: Ibis Capital), it has still not incurred the massive transformations technology has brought to other segments of our society. The new market, accordingly, needs to adapt to the new world.
Changing habits & tools : In 2016, 64% of children accessed the Internet via their own laptop or tablet, compared to just 42% in 2012 (source : influence Central). In 2015, 85% of college students owned a smartphone vs. 72% in 2013 (source: Pearson Education). This means not only that computers used by children are more powerful than those used by NASA to land on the moon but also that children access better and more information than any US president before the internet.
Information is free, and both instantly and universally available. Teachers used to be the gatekeepers to knowledge : their function was to transmit what they knew. Today, learners access knowledge instantaneously, for free, and their knowledge can go well beyond what a teacher is expected to know. The teacher’s role is changing to provide guidance rather than content: clarifying concepts, teaching how to verify sources & information, developing curiosity & aspirations etc. In short, they help teach how to ask the right questions and look for the answer instead of providing an answer.
·Skills & Competencies are becoming obsolete faster and faster, and learning for new jobs cannot be delivered by basic education only. A McKinsey study found that c. 30% of tasks in 60% of occupations could be computerized. That means that if entire jobs will not completely vanish, they will at least be redefined. There is also a need to move from the old paradigm of “What we learn” to the new one of “How we learn”: students have to be taught to be highly motivated lifelong learners, with all the skills and values required to survive in our world of accelerating change.
3. Upgrading education through technology
Innovative technologies and usages are maturing and becoming ready to enter schools, upgrading the existing education system to make it more :
Effective. Whereas previously the only concrete metric on education was cost, we now have the potential to assess educational quality and effectiveness in newer, more accurate ways. Big data and analytics provide quantifiable insights to assess actual competencies & skills and improve the outcome of employability. MOOC and digital platforms provide free courses and charge for a certificate. Bootcamps and new micro schools deliver a high rate of success in securing a job within 6 months of course completion.
Scalable. Digitization makes it possible to deliver the best education for everyone. Media platforms are scaling content, enabling students to access the best teachers on any topic, anytime and anywhere.
Personalized. Recommendation engines are ubiquitous. In education, algorithms and machine learning make it possible to predict the best paths for learning depending on your skills, and the speed at which you understand and assimilate. McKinsey estimated that increasing the use of student data in education could unlock between $900 billion and $1.2 trillion in global economic value.
Engaging. Learning technologies — gamification, social and collaborative training, mobile learning, virtual classrooms and augmented reality — are revolutionizing the learning experience, both in schools and in the workspace. Imagine when our children will fully enjoy new immersive experiences to learn ancient Egyptian history, astronomy or anatomy… implementing innovative learning technologies without re-thinking curricula will not work: contents and structures themselves will also need to innovate.
4. Edtech: an emerging industry
The edtech market has been accelerating for the last 3 years, as evidenced by many signals:
Edtech pioneers have democratized new ways of learning. They have demonstrated their ability to : scale the best and largest educational contents, help schools to digitize their curriculum and degree, develop collaborative and social learning, personalize the way we learn, and open new models of schools. In the US, Coursera, Udacity, 2U, Duolingo, Schoology … are examples of success stories, from K12 to lifelong learning.
Titans of the digital world are addressing the Education market: From K12 to higher ed, Google, Apple, and Microsoft are battling to win marketshare inside schools. Since the acquisition of Lynda, Linkedin has been focusing on the issue of lifelong learning issue as a new driver of growth. Facebook is testing a learning platform for IA and IOT developers.
Dedicated Edtech funds (Learn Capital, Rethink Education in the US) and incubators (Emerge in the UK, Mindset in Israel) have materialized to set the standards and make new success stories emerge.
Investments in the edtech market have skyrocketed in the past 3 years. $7bn have been invested in the 2015–2017(S1) period. Investment levels are still low when compared to the addressable market, and mainly come from Asia and America: there is a clear place for our future European leaders.
At Educapital we believe in the power of edtech to bring changes in the way we teach, learn, and train students and the workforce. Investing in edtech is not another “market opportunity”; to us, it is a necessity to fuel creativity among eager young minds, to allow everyone to develop their talent and to overcome the challenges of an ever-changing labor market.
At Educapital, we are convinced that there is a clear place for our future edtech leaders in Europe.
Litzie Maarek - Founding Partner