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The pandemic changed the way we do things significantly, from how we buy groceries to the way we work together. Some of the changes are temporary, but many of them will most likely endure. The shift in the educational sector provided new opportunities for Ed Tech investors and startups.

There was a significant challenge in conventional thinking after school shutdowns. Implementation of different hybrid and remote approaches to teaching and distance learning increased as COVID-19 kicked to the curb classroom status quo.

What is Ed Tech?

Ed Tech (educational technology) is a terminology used to refer to companies that create hardware and software solutions to improve learning outcomes. It is a sector within education that enhances teaching practices by providing education-related services to institutions and students.

Ed Tech serves the entire education sector in the U.S., starting from K-12 to Continuing Education. It includes Student Information Systems, digital curriculum, Learning Management Systems, as well as other products and services. Also, Ed Tech has other appealing attributes like favorable economic/structural forces and low working capital requirements.

Ed Tech market was doing well before the pandemic and is expected to grow for the next ten years. One forecast predicts that the Ed Tech market in North America by 2027 will reach approximately $100 billion in annual revenue.

Ed Tech is Growing

The pandemic hit the education sector, forcing institutions to look for creative ways to educate the youth. According to Grandview research, in 2020, the global Ed Tech market was worth $89.49 billion.

From 2021 to 2028, the market size is expected to experience a compound annual growth rate (CAGR) of 19.9%. This proves that digital technology can significantly improve youth access to education.

Ed Tech is also an enticing subsector for private equity (PE) investment as it’s positioned well to make good use of market forces.

Ed Tech recognition steadily rose over the years. However, it only generated mass adoption when the pandemic began. The lockdown has transformed Ed Tech into a mandatory tool for continuous learning, especially among schools that have adopted it wholeheartedly.

Major Effects on the U.S. Education Sector and Technology

Technology has become a popular tool in teaching and learning globally since the pandemic. When used correctly, it provides tools needed to create and evaluate activities that were considered out of reach in the past. Ed Tech has also played a big part in:

1. Online Enablement of Learning Management Systems

Educational institutions have managed to stay hyper-connected by adopting Learning Management Systems (LMS). The shift towards LMS platforms gained momentum during the pandemic. LMS provides a streamlined E-Learning platform for instructors, administrators, as well as students alike.

2. Cutting Costs

It’s no secret that the education system is under immense pressure to cut the budget further. Classroom sizes keep increasing as the salaries of teachers decrease. The reality is that Ed Tech is an essential tool that administrators can use for students to achieve writing test scores.

Online tools reduce the need for printed materials making resources more accessible to teachers and students. It also helps to improve the performance of students while lowering the expenses.

3. Online Recruiting and Study Aids

COVID scenarios have made many schools move rapidly to online learning. Parents, students, teachers, as well as educational institutions spend most of their time online. This has led to an increase in the use of digital marketing to help convert potential students to take admission. Ed Tech also provides access to online study tools.

4. Improving Operations

Educational institutions need to improve operations to build a positive learning environment. The pandemic made it clear that virtual learning tools were necessary for teachers.

A school can use scalable software solutions to research and analyze academic content with integrated technology. The process of implementing new technology trends in schools can be challenging. But schools can buy self-contained software and integrate it with other systems.

Investment Opportunities in Ed Tech

Investors contributed $13.8 billion during the first months of 2021 to Ed Tech startups. According to PitchBook data, this figure exceeded Ed Tech funding for all of 2020.

As of mid-December, investors have funneled $15.73 billion across 1,229 deals of Ed Tech startups. PitchBook analysts also evaluated the Ed Tech industry in 2020 and found that the growth drivers included:

    • An increase in demand for personalized instruction
    • Soaring demand on upskilling and reskilling opportunities
    • The rising cost of college and pursuing higher education
    • Changing priorities and access in Asia
    • Revamping Ed Tech as a supplement but not a replacement
    • The need to entice a tech-savvy, younger generation

Increased adoption of online learning technologies amid the pandemic, combined with strong public market conditions, has paved the way for a bevy of notable public exits in the category.

Learning platform Coursera debuted on the NYSE in late March 2021 with a valuation of over $4 billion. A few months later, foreign language education app Duolingo hit the Nasdaq with a valuation of $3.7 billion. And in November 2021, Udemy, an education marketplace that offers online classes focused on business and technical skills, went public with an initial market value of more than $4 billion.

In Summary

There are growth opportunities for Ed Tech for K-12 and universities. It provides different digital platforms for educators to build communities digitally and virtually.

It also relieves the burden of the cost of education among many people. It makes knowledge easily accessible to teachers and students.

COVID-19 revealed the need for online education as most opportunities rely on the advancement of new technologies. The new normal is that more digital tools will continue being used as the years go by since more people have embraced the idea of online learning.

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By Liberty Advisor Group