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Home / Insights / Remote learning drives wave of ‘EdTech’ investments

Remote learning drives wave of ‘EdTech’ investments

FOR BUYERS
Remote learning drives wave of ‘EdTech’ investments

Like so many other things we’ve previously taken for granted, COVID-19 has changed the way we learn. In many situations, face-to-face teaching has become something to be avoided and innovation is responding to this trend in a major way. Several industries are keen to meet demand for effective, tailored and accessible education technology (EdTech) and the result has been an active M&A market around the world.

The UK, and particularly London, is taking a leading role in the industry, which is only just starting to hit its stride, boosted by school, university and workplace closures globally. And investors are taking notice - with venture capitalists eager to snap up start-ups or invest heavily in prospects that they believe will grow.

What’s been happening in the UK EdTech sector?

Although COVID has certainly given it a boost, the EdTech sector has actually been extremely active in the UK for a number of years. Schools already spend some £900 million of their precious budgets each year on EdTech, while the market globally is set to reach a total value of around £120 billion in 2020.

In London, last year (before COVID even struck), London EdTech firms raised some £94 million in venture capital funding. Laura Citron, CEO at London & Partners, explained that London’s “thriving EdTech ecosystem provides access to growth capital, expertise, talent and universities all in one place. It is a city that fosters creativity and innovation, enabling startups and scaleups in the EdTech space to develop exciting new technologies that will shape the future of learning.”

Most of the activity and innovation in the sector, however, hasn’t come from more traditional education publishers, but from start-ups. That is, until the global pandemic arrived and EdTech became a must-have for education providers, as opposed to a ‘nice-to-have’.

The education sector has long-been considered to be extremely conservative when it comes to innovation and investment. It’s a slow-moving, traditional industry in the UK where things have been done a certain way for a long time. Purse strings can be tight and spending decisions are often wrapped up in red tape and inflexibility. However, along came COVID and everything changed.

What’s driving UK EdTech M&A?

There are several places from which many of the deals in UK EdTech are coming:

Private equity investment

Investors have increased their interest in the EdTech sector since COVID, as they identify attractive characteristics in the market, such as scalability and loyal customers. In light of the pandemic, user numbers have soared for many EdTech businesses and some have offered free access in order to reach as many users as possible.

However, as time goes on and classrooms remain closed, users demand more tailored education provisions. In turn, investors are learning that this is the time to offer an enhanced product in exchange for subscriptions or paid-for apps and access models. Investment allows start-ups to develop their initial products into something more appropriate for long-term use, which individuals, businesses and educational institutions will happily pay for at scale.

Brighteye Ventures is a private equity fund specialising in EdTech investments. It explained that the industry has an ‘unprecedented’ opportunity for growth “as educators and students are adapting to distance learning en masse and millions of displaced workers are seeking to upskill”. It has already invested in several UK-based EdTech businesses, such as a £5.6 million investment in Zen Educate, an on-demand platform that helps schools deal with teacher shortages.

Sophia Technologies, a start-up launched by former independent school headteacher Melissa McBride offers full time remote learning and on-demand tuition. She has confirmed that her first funding round has secured her more than £600,000 from private equity investors. The two-year-old start-up is now worth an estimated £2.5 million.


Educational publishers

Increasingly, publishers are realising the value of investing in EdTech in order to ensure their products are suitable for increased remote learning in the future. The EdTech industry has disrupted the traditional education publishing industry to the extent that publishers are now buying up EdTechs in order to modernise their offering.

One such deal about to be finalised is a £400,000 investment in coding game Erase All Kittens, with the funding coming from an educational publishing house.


Strategic investment/consolidation

EdTech start-ups looking to expand their customer base may find doing so difficult due to the conservative nature of the marketplace in which they operate. Buying up a rival in order to take over their operation and customer base is an attractive prospect for small EdTech businesses with an appetite for growth and money to spend.

Discovery Education, an international digital curriculum business has just completed the purchase of UK-based Spiral, a formative assessment platform. Discovery Education explained: “The acquisition of Spiral aligns with our strategy of adding features to our digital services that save educators time and increase student engagement.”

Last year, it purchased AR/VR immersive learning provider Inspyro, another UK-based business. Discovery Education explained: “The purchase of Inspyro and the addition of their talented staff to the Discovery Education team expands our capacity to develop and quickly deploy VR and AR content educators can use to create captivating lessons that ignite students’ natural curiosity.”


In conclusion, the EdTech sector is likely to be one of the few sectors to significantly benefit from the pandemic. Having said that, the issues that are driving greater take-up and demand for digital learning, educational AI-driven tools and money-saving tech for the education sector are long-established and are not going away. As a result, investors around the UK and beyond are confident that the need for EdTech will certainly outlive COVID-19.


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