Investors are putting a premium on companies that have the products and expertise to span distance learning and a return to in-person lessons.
Global spending on artificial and virtual reality in education is expected to soar from $1.8 billion to $12.6 billion annually over the next four years, a new analysis projects.
Spending on artificial intelligence in education, meanwhile, will jump from $800 million to $6.1 billion yearly over that same period, according to the report released recently by HolonIQ, a global research and intelligence firm.
The report made several projections for global ed-tech expenditures in K-12, higher education, and corporate training through 2025. Those include forecasts of total education spending, upskilling, spending on digital technologies as a proportion of total education spending, and venture capital investment.
“AR/VR is coming down the stack from workforce into higher ed, and is slowly making its way into K-12,” Patrick Brothers, the co-CEO and co-founder of HolonIQ, said in an interview.
Augmented and virtual reality has seen only modest uptake yet in K-12 because there’s a big learning curve for students and teachers to become familiar with the technologies, and because their use will take some time to catch on, he said.
Other areas of advanced technology figure to see significant growth in expenditures through 2025, include robotics and blockchain, according to the report. It projects that the total spent on robotics will rise from $1.3 billion in 2018 to $3.1 billion in 2025, and that the total spent on blockchain will rise from $100 million in 2018 to $600 million in 2025.
The biggest driver for the use of blockchain in education is a desire for secure and scalable credentialing, while the biggest spark behind the use of robotics in education is schools looking for different ways to engage learners in STEM fields, Brothers said.
HolonIQ forecasts overall global spending on ed-tech to rise from $227 billion in 2020 to $404 billion in 2025.
Currently, spending on digital technologies makes up just 3.6 percent of total expenditures in the areas of K-12, higher ed, and corporate training. In 2025, that percentage is expected to rise to a higher but still small level of 5.2 percent of overall spending.
“While the longer term impact of COVID-19 on education models is yet to play out, over the next few years we expect an upswing of spending on digital infrastructure in education and greater spending over the long term in new digital models,” the report states.
HolonIQ defines spending in the report as governments, companies, and consumers devoting money to a learning product or service. That distinguishes it from education investments, which are characterized by the supplying of capital in exchange for a stake in a company, Brothers said.
The report also notes that global ed-tech venture capital funding has risen from its previous record of $8.2 billion in 2018 to $16.1 billion in 2020, with Chinese companies occupying the largest share of funding compared with other countries.
Investment in education “will continue to grow, but is not evenly spread across the globe and weighted heavily towards late-stage mega-rounds,” the report says.
Chinese ed-tech companies saw $26.8 billion in venture capital investment between 2010 and 2020, while U.S. companies saw $13 billion invested in the same period.
Overall, HolonIQ projects that total global education spending will rise from an estimated total of $5.4 trillion in 2020 to a total of $7.3 trillion in 2025, noting that education composes over 6 percent of global GDP.
Weld North Education, a major provider of digital curriculum, has acquired BookheadEd Learning, the developer of a digital-first core curriculum, at a time when K-12 districts and companies are more pressed than ever to find innovative ways to deliver academic resources.
The flagship product of BookheadEd Learning is StudySync, a online curriculum that combines fiction and nonfiction texts with video and multimedia.
“It is a media-first product, and engagement is crucial to its success,” said Jonathan Grayer, founder and CEO of Weld North. “The folks that built StudySync are very focused on engagement and know how to do that.”
Weld North purchased BookheadEd for two main reasons, Grayer said.
First, BookheadEd’s recent success and increased market share relative to textbook providers raised Weld North’s confidence in the company, especially as the education marketplace moves further and further into digitally driven classroom materials.
The second reason stems from the high quality of BookheadEd’s resources, according to Grayer.
“We’re going to use their development shop to make all kinds of instructional material to broaden our product set,” he said.
Weld North, founded in 2010, has made several acquisitions over the years, and its portfolio has grown to include online courseware and intervention company Edgenuity; and supplemental curriculum provider Imagine Learning; core curriculum company LearnZillion.
In a press release announcing the acquisition, Weld North noted that StudySync’s curriculum has been adopted in California and Texas, and is under consideration in the Florida English/language arts instructional materials adoption process.
If Florida ultimately adopts the product, that would notch StudySync a place on the adoption lists of three dominant K-12 state markets, in terms of public school enrollment. The foothold the company has established in those locations factored into Weld North’s acquisition decision, Grayer said.
“You can’t be a major player in core curriculum without being a major player in Texas, California, and Florida,” he said.
The deal comes as many districts have been forced to make a massive shift to online learning, in response to the the health crisis imposed by COVID-19. Many districts are deeply concerned about their ability to engage students in remote and hybrid learning environment.
The acquisition is Weld North’s second in the core curriculum space, after LearnZillion, a deal that was completed in January 2020. StudySync will help to round out Weld North’s core offerings, Grayer said.
Weld North expects to remain very active in the acquisition space.
“We’re looking to add digital curriculum of all kinds, and we’re talking to lots of owners of assets that are not duplicative of what we have,” Grayer said.
A New Investment From Onex Corp. The acquisition comes the same week it was announced that Onex Corp. has agreed to make a “significant investment” in Weld North, alongside existing investors, including global tech investment firm Silver Lake, according to a Monday press release.
“Onex shares our passion for education technology and has an impressive track record investing behind industries undergoing transformation,” Silver Lake Managing Director Jonathan Durham said in a statement. “Since the time we first invested three years ago, we have never been more enthusiastic about Weld North Education’s future and we look forward to working closely with Onex and Jonathan for years to come.”
Onex coming into Weld North’s investment picture gives Weld North added stability for the long haul, which should help foster confidence among teachers and students in Weld North’s products,
‘All-in-One’ Platform for Early Education Raises $55 Million. Brightwheel, an early education platform, has raised $55 million in Series C funding in a round led by Addition Capital, participated in by Emerson Collective, Next Play Ventures, GGV Capital, Bessemer Venture Partners, Eniac Ventures, and private investors Julia and Kevin Hartz, as well as Daniel Shapero.
The company plans to use the investment to focus on new product development and expansion, and to support a fully distributed workforce.
Brightwheel provides an all-in-one SaaS platform serving preschools, childcare providers, camps, and afterschool programs. It also seeks to help teachers manage their day and communicate with parents, gives parents deeper insight into curricula, and automates administrative processes.
Since COVID started, Brightwheel has focused on pandemic-specific needs like at-home learning, safety and health checks, digital communications, and no-touch sign-in systems.
A Pass Educational Group Acquires Content Development House. A Pass Educational Group, a major custom education content provider, has acquired Victory Productions, another major content development house for learning companies and organizations, A Pass announced.
The acquisition adds educational language translation services in Spanish and other languages to A Pass’ portfolio of K-12 and higher education offerings, according to the announcement.
A Pass partners with educational publishers and higher ed institutions in creating content that seeks to engage learners at all levels.
“A Pass and Victory Productions share so much, from expertise to values to a proven record of success,” said A Pass founder and CEO Andrew Pass. “We look forward to bringing them seamlessly together with complementary services to ensure that same kind of success for our customers and the educators and students they work with.”
Victory Production’s name will dissolve, but the announcement says the company’s customers can “expect to enjoy the same customer service experience and satisfaction they’ve come to expect,” as well as access to new services such as e-learning development.
Cialfo Receives $15 Million Investment. Cialfo, a company focused on international student mobility, this week announced it received $15 million in Series A funding.
In addition to a range of offerings in the higher ed space, Cialfo provides several web and mobile solutions, including AI-powered college search, application management tools, a communications suite, and the ability to directly apply to thousands of formal and informal higher learning opportunities around the world, the company said in a press release.
Cialfo is “accelerating discussions” around acquiring similar firms that operate in K-12 education, with an aim to establish a stronger position and greater market share, the company said in a statement.
“A standstill on global travel has upended education entirely – forcing high schools and universities to engage current and potential students virtually,” Cialfo CEO and co-founder Rohan Pasari said in a statement. “The adoption of technology-driven education solutions is rising at an unprecedented rate and we have a key role to play in accelerating the student recruitment process from physical to virtual channels.”
The assessment and research organization ETS recently launched a venture capital arm. The fund’s managing director, Ralph Taylor-Smith, talks with EdWeek Market Brief about its ambitions.
India’s ed-tech sector is rapidly accelerating, riding a wave of momentum driven by increased investments and acquisitions, while its constellation of home-grown startups are adding new users to their platforms by the millions.
So far in 2020, funding is smashing previous levels for India-based education startups, outpacing even investments made in U.S. ed-tech companies…
Europe’s largest ed-tech venture capital firm has started its second fund.
Brighteye Ventures anticipates investing in 15-20 companies over the next three years at the seed and Series A stages, and writing checks of up to $5 million.
The Luxembourg-based firm’s recent $54 million fundraise for its second fund brings the firm’s total assets under management to $112 million, and it anticipates raising a total of $88 million by the spring for Fund II, the Brighteye Ventures said in a statement.
Brighteye Ventures anticipates receiving funds from a mix of family offices and strategic and institutional investors.
Like its first fund, which committed roughly $60 million in total capital, Brighteye Ventures is expected to spend about half of its second fund on direct-to-consumer products, one-quarter on corporate learning tools, and one-quarter on software that enables existing educational institutions to be “better, faster and cheaper,” Benoit Wirz, a partner at Brighteye, said in an interview.
One possible exception in that calculus is that Brighteye could look to invest a bit more in software for schools and universities, as the pandemic has increased digital penetration within the education market.
“The companies that have done the best [during COVID-19] are full-stack, purely online educational offerings that respond to people’s needs to train, or particularly related to professional skills,” he said. Yet “across the board, I think online educational experiences are doing well.”
Two of the 18 total companies financed by Brighteye’s first fund were based in the U.S., Wirz noted, adding that he expects Brighteye will invest in about one to four U.S.-based companies out of the second fund.
About 80 percent of the firm’s investment targets are based in Europe.
In terms of the types of U.S. companies that Brighteye will look to target through its second fund, the firm is considering software that allows for large-scale delivery of online education, ranging from administrative tools to tutoring platforms to online assessment proctoring, Wirz said.
Wirz also sees enormous potential in efforts to apply artificial intelligence to learning.
“The use of AI for content creation is something that we’re really interested in,” Wirz said. “There’s a number of companies that are doing that quite well.”
Brighteye is also scouting potential uses of AI for narrow professional development applications, Wirz said. He pointed to the firm’s completed investment in Silicon Valley-based TeachFX, which provides a coaching application to improve the quality of dialogue between teachers and students
The firm has invested only about 50 percent to 60 percent of the money committed to its first fund, but the remainder of capital available in that account is reserved for follow-on investments in existing portfolio companies, according to Wirz.
The firm has committed or invested about 5 percent to 10 percent of the $54 million currently in its second fund, he said.
“While Brighteye Ventures has long advocated for greater adoption of tech-enabled learning solutions, we scarcely imagined the size of the move that closing 90% of global schools would provoke in Europe, the U.S. and beyond,” said Alex Spiro Latsis, managing partner at Brighteye Advisors, the sole advisory firm to the fund, in a statement.
Latsis continued, “Post-crisis we expect broader awareness of tech enabled learning tools to continue to drive increased adoption as consumers and businesses look to enhance skills through the coming recession and recovery.”
Amit Patel, a managing director at Owl Ventures, talks about how his venture capital firm makes investment decisions, and the forces he sees in play in the market during COVID-19.