Three heavyweights share their views on education markets
The education and education technology markets are quite robust and relatively accessible to entrepreneurs. It’s a multi-billion dollar market with public companies, many accelerators, and successful education-focused investors.
Unlike other markets of similar size, education markets can be opaque. There is no ETF or education index, no really good, objective source of market-wide media attention. That’s why it’s useful to check in with the leaders who live in the education market from time to time – the people who start businesses and place investments.
Susan Cates is a managing partner of Leeds Illuminate, a workforce development and training capital firm, and just closed a $ 650 million raise for her holding company, Emeritus. Sue Decker is CEO and founder of edtech Raftr, former president of Yahoo! and current member of the Berkshire Hathaway Board of Directors. Sarah K. Lee is Senior Vice President of Education Strategy at Red Ventures, a digital media heavyweight with notable educational real estate.
On the impact of the pandemic on education and edtech, Lee of Red Ventures told me that the current era of Covid-19 has done three things for edtech. “It accelerates growth, attention and capital for companies having something to do with technology-based human development. Second, edtech has gotten a little sexy, but to be clear, it’s not very sexy for investors, speculators, policymakers, and parents – although it grew out of the crisis and the mass struggle for it. manage the continuity of education during this pandemic and its consequences, ”she said.
As a result, and third, said Lee, “Investing in this space has become expensive. With an abundance of venture capital and private equity funds, more funds overall and generalist funds emerging, large tech companies, human capital companies have more leverage than ever before.
On the same issue, Decker of Raftr said: “The main trend that we are seeing is that of mergers and consolidations of companies in all product offerings. A trend, she says, “is driven largely by a desire for more holistic, vertically integrated offerings that serve the same perceived buyers in universities: rectors, vice-presidents of student affairs and CIOs. Decker added, “This business is driven by the vendors of software, but it’s not necessarily to the benefit of the buyers.” Therefore, this opens up a tremendous opportunity for more agile companies with a more modern technology stack to enter the market. ”
And Cates, of Leeds Illuminate, was unanimous that the pandemic has energized educational spaces. “We have seen 15 years of acceleration compressed into 15 months in some areas of education and workforce development during the pandemic, especially for adult learners,” she said.
On what drives education markets, Lee says, “I believe massive changes or sweeping reforms in education parallel major changes in the way humans live and work, shifting value systems. and demographic changes. The need to work to fit in with life, rather than changing our lives for a job, has had an impact on how young families think about where and how they live. Where we find community in real life and online, it changes the way we come together, study and build relationships, opening up a world of technology-based teaching and learning that previously operated on the fringes.
According to Cates, the pace is guided by observations and personal choices. “While parents have a front-row seat in their children’s educational experience, some have – quite reasonably – decided that the current model is not working for their children. This sparks increased interest in alternative K-12 models, increased consumer spending on educational support for young learners, and more questions about the value versus cost of traditional undergraduate education models. She said.
Asked what could hold back the industry, Decker said, “Despite a global consumer economy that is chock full of cash, rebounding from the impacts of COVID with the help of the biggest monetary stimulus we’ve ever seen outside of time war, little of this money flows into universities. Budgets remain tight, staff turnover high and operating conditions uncertain as the Delta variant rages on. Edtech companies must be able to achieve one or more of the following goals – increasing staff productivity, reducing expenses, or generating new revenue – given these realities.
When asked to look ahead five years, predict trends and assess their enthusiasm, Lee said, “. . Lee also said she was excited to “see massive changes in early childhood solutions for families that are aligned with the future of work and community, great companies thinking of people over 50. years and their next 20 to 30 years on the planet, pervasive sanity rooted in educational and work delivery systems and a bit more diversity among investors and founders becoming unicorns.
Looking to the future, Decker also said that “universities will benefit from a closer partnership with their local communities to leverage their cost base and attract more revenue – for example, by expanding learning experiences across the board. community at large, while providing students with authentic learning opportunities. experiences and internships that extend beyond the campus. Edtech companies that can facilitate the creation of a digital community across the physical boundaries of campuses will benefit from this trend of expanding centers of excellence. ”
Cates, Decker, and Lee know what they’re talking about. People listen to them. And to peek behind the curtains of education markets, it’s great to be able to hear what they have to say.