Aug. 12, 2020 | InBrief

The opportunity in EdTech: Scalability, UX, and cybersecurity emerge as winning characteristics

Remote learning and digital enablement are at the forefront of conversations these days. Here’s what we’ve seen based on our experience in the EdTech space.

Usually this time of year, parents are gearing up to send their children back into the classrooms or back to college campuses. With many school districts and universities using digital-only instruction to start the academic year—and some adopting a hybrid model—the role of technology has never been more front-and-center. And important.

The EdTech space is expected to be worth $285.2 billion by 2027, up from $76.4 billion in 2019. This market size was updated in July, so it takes COVID into account, but is probably still underestimated. Almost overnight, the largest universities to the smallest school districts have had to choose—and quickly implement—various software platforms and technologies. 

Said directly, the EdTech space was not exactly ready for this. And as private equity eyes the trends that will sustain past this crisis, remote learning and digital enablement is rising to the top. We have some initial thoughts, based on our experience working with software platforms in the EdTech space:  

1. It’s not just learning

All areas of education need to become digitally enabled. Recruiting, admissions, advising, scheduling, collaboration, grading, books/information. The list goes on. If EdTech companies serving any of these functions didn’t have remote capabilities before, they’ve been hit hard or had to spin up capabilities quickly to deliver to their market. Investments are needed in all areas that support education, not just remote learning.  

2. Scale is being tested

A rise in demand is good, but an unprecedented spike comes with challenges. Platforms are having to scale their architecture and infrastructure like never before, and those that were already architected the right way did well. Those that were not designed to scale are witnessing gross margin pressures and are trying to find cost-effective ways to re-engineer solutions to scale. 

3. Cybersecurity is a huge focus

Where physical and building safety has been the focus for schools in the past, cybersecurity jumped ahead in the priority list of security concerns. With millions of home networks being used, the surface area for cyber attackers—with the target being children—has grown exponentially. Not a great combination. Only platforms that demonstrate the highest level of focus on security will win contracts and a continued focus on adapting to hackers’ tactics will be essential.

4. Consolidation is expected to continue

As companies continue to evolve their capabilities, we expect more consolidation as they look to complement and expand their portfolio. We are already seeing rollups of educational companies that have struggled to pivot to remote learning. 

5. Platforms that have the best UX today will win long-term

With all educators across the country trying to figure this out simultaneously, word-of-mouth on software selection will be huge and early winners will emerge. Platforms that are easy to adopt among faculty, students, administrators, and parents because they are intuitive to use, well-functioning, collaborative, and rapidly add new functionality, will lead.  

6. Now is a good time to test new business models

Recent trends such as an uptick in home schooling, curriculum delivery by non-academic personnel (parents, caregivers, etc.), and greater awareness of learning differences across students suggest there is potential for alternate business models. This could include pay-for-live help, charging for certification and testing, monetizing content, and more. 

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