The article describes market trends, startups on the map, and investments in EdTech.
What is EdTech?
In the media EdTech is often synonymous with online education, but in fact this concept is much broader and includes the entire set of digital tools aimed at improving the efficiency of the educational process.
In addition to online schools, interactive courses and educational applications, there are developers of electronic systems for educational institutions, training equipment, VR simulators, platforms for corporate training and other products on the market.
Education is one of the world’s largest industries, accounting for over 6% of GDP. According to the forecast of Holon IQ analysts, by 2025, the total volume of the global education market will amount to $7.3 trillion.
At the same time, the penetration of technology in the industry is still low – the figure accounts for less than 4% of total spending on education. In absolute numbers, the total investment in the digital transformation of the industry was $227 billion in 2020.
The COVID-19 pandemic and related quarantine restrictions are expected to have a long-term impact on education, and by 2025 the EdTech market will double – we will see infrastructure upgrades and new digital business models emerge.
In the b2c segment, companies are divided into three groups with subcategories:
- For kids: general development and preparation for school, smart toys
- For schoolchildren: distance learning, digital services, platforms for preparing for exams, for selecting tutors and for independent work on the school curriculum, online programming schools and additional education services.
- For adults: multidisciplinary online universities and higher education, educational applications and online simulators, IT training, languages, humanities, wellness&lifestyle.
More than 40% of the companies on the map work in the b2b segment – these are vendors of IT solutions, developers of platforms and support services for educational institutions and businesses. Among them:
- VR/AR technology vendors in education;
- developers of proctoring and monitoring systems;
- platforms for corporate training;
- services for launching an online school or interactive courses;
- manufacturers of educational equipment and other companies.
Investments in EdTech
Total venture capital investment in the global education market in 2020 was $16 billion, nearly double the 2018 figure. More than 60% of this amount is accounted for by China, the U.S. – 15%, India – 14% and Europe – 5%.
Investors most often focused on educational products for schoolchildren, additional education services and platforms for teachers.
As Holon IQ notes, the steady growth of venture capital investment in EdTech is leading to more IPOs of education startups. For example, education platform Coursera held an initial public offering in March of this year. At the end of the offering, the company was valued at $4.3 billion.
It’s a long-running trend. While 10 education companies with a market capitalization of more than $1 billion were listed in 2015, the number rose to 30 in 2018 and should reach 100 by 2025.
Experts and analysts around the world agree that online education and other EdTech segments will continue to grow exponentially over the next five years.
Global challenges are pushing the industry to change, and the pandemic is not the only one of them. For example, it is known that by 2050 there will be two billion more school, university and other educational graduates in the world than there are today. Without fundamental changes in attitudes, infrastructure and business models, the educational system will not be able to cope with the growing workload from year to year. The market will have to address staffing shortages and funding shortages.