Education

Three Heavyweights Share Their Views On Education Markets


The education and education technology markets are pretty robust and comparatively accessible by entrepreneurs. It’s a multi-billion dollar marketplace with public companies, abundant accelerators and successful, education-focused investors.

Unlike other markets of similar size though, the education markets can be opaque. There is no education ETF or education index, no really good, objective source of market-wide media attention. That’s why it’s good to check in from time to time with leaders who live the education marketplace – the people who build companies and place investment bets.

Susan Cates is Managing Partner of Leeds Illuminate, a growth equity enterprise for workforce development and training, and just closed a $650 million raise for her portfolio company. Sue Decker is CEO and founder of the edtech company Raftr, former President at Yahoo! and current board member of Berkshire Hathaway. Sarah K. Lee is SVP of Education Strategy at Red Ventures, a digital media heavyweight with some notable education real estate.

On how the pandemic has impacted education and edtech, Lee of Red Ventures told me that the current Covid-19 era has done three things for edtech. “It’s sped up growth, attention, and capital for companies having anything to do with technology-enabled human development, edtech got a little bit sexy, but to be clear not a lot sexy to investors, speculators, policymakers and parents alike – albeit borne out of crisis and mass struggle to manage education continuance through this pandemic and its aftermath,” she said.

As a result, Lee said, “investing in this space got expensive. With an abundance of venture and private equity cash, more funds in aggregate, and generalist funds jumping in, great edtech, human capital companies have more leverage than ever before.”

On the same question, Decker of Raftr said, “The primary trend we are seeing is mergers and consolidations of companies across product offerings.” A trend she says, “is largely driven by a desire for more global and vertically integrated offerings that serve the same perceived buyers in universities: provosts, VPs of Student Affairs and CIOs.”  Decker added, “This activity is being driven by the sellers of software, but it is not necessarily to the benefit of the buyers. Consequently, it is opening up a tremendous opportunity for more nimble companies with a more modern technology stack to enter the market.”

And Cates, of Leeds Illuminate, made it unanimous that the pandemic has boosted education spaces. “We have seen 15 years of acceleration compressed into 15 months in some sectors across education and workforce development during the pandemic, particularly for adult learners,” she said.

On what’s driving the education markets, Lee says, “I believe that massive changes or sweeping reforms in education parallels major shifts in how humans live and work, changing value-systems, and changing demographics. The need for work to fit into life, versus shifting our lives for a job, has impacted how young families think about where and how they live. Where we find community IRL and online changes the way we convene, study, and build relationships— therefore opening up a world of tech-enabled teaching and learning that was previously operating on the fringes.”

According to Cates, the pace is being driven by personal observations and choices. “As parents have gotten a front row seat to their children’s educational experience, some have – very reasonably – decided that the current model doesn’t work for their kids. That is driving an increased interest in alternative models in K-12, an increase in consumer spending on educational support for young learners, and more questions about the value relative to the cost of traditional undergraduate education models,” she said.

Asked what may be holding the sector back, Decker said, “Despite an overall consumer economy that is flush with cash, rebounding from the impacts of COVID with the help of the biggest monetary stimulus we have ever seen outside of wartime, little of this money is flowing into universities. Budgets remain tight, staff turnover high, and operating conditions uncertain as the Delta variant rages. EdTech companies must be able to achieve one or more of the following goals – increase productivity of staff, reduce expenses, or bring in new revenue – given these realities.”

Asked to look ahead five years, predict trends and gauge their excitement, Lee said, “The understanding that any organization with two or more people will inherently require teaching and learning and collaborating means that absolutely every company and organizations needs to think about ‘edtech’.” Lee also said she is excited to “see massive shifts in early childhood solutions for families that are aligned to the future of work and community, awesome companies thinking about people over 50 and their next 20-30 years on the planet, ubiquitous mental health ingrained into school-based and work-based benefit systems, a bit more diversity amongst investors and founders becoming unicorns.”

Also looking ahead, Decker offered that, “universities will benefit from partnering more closely with their local communities to leverage their cost base and attract more revenue – for example, by extending learning experiences into the broader community, while also offering students opportunities for authentic learning experiences and internships that extend beyond campus. EdTech companies that can facilitate digital community building across the physical boundaries of campuses will benefit from this trend of extending centers of excellence.”   

Cates, Decker and Lee know what they’re talking about. People listen to them. And for purposes of peeking behind the curtains of education markets, it’s good to be able to hear what they have to say.



READ NEWS SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.