Why Are Seed Investments In Edtech Startups Growing?

Why Are Seed Investments In Edtech Startups Growing?

Edtech is the practice of using information technology (IT) tools into the classroom to create a more engaging, inclusive and personalized learning experience. Today’s classrooms have moved beyond the traditional norm of a physical environment and bulky desktops to technology-infused tools with tablets, online interactive courses and even robots who can help sick students to take notes as well as record lectures. 

Edtech tools are changing classrooms in many ways including edtech robots making it easy for students to stay engaged through fun forms of learning and machine learning as well as blockchain technology assisting teachers with grading tests and holding students accountable for assignments. 

According to EdSurge, venture capitalists (VCs) had funded around USD 1.7 billion into the edtech market in 2019. This investment was made in the form of 105 deals, a majority of which were large series C investments. The number of fundings under Series A and B as well as Angel and Seed rounds had also increased exponentially. 

The startups that received recognition under the category of “Top EdTech Deals for 2019” were BetterUp, MindTickle, EdCast, Coursera, Guild Education, Andela and A Cloud Guru. They accounted for 39% of the edtech investment in 2019. The pandemic in 2020 has become possibly the largest contributor to boost edtech exponentially. 

There are a number of reasons why VCs are increasingly investing in edtech startups and here’s why:

1. Untapped Opportunities

Even though we are in the millennial age, there are various regions and communities that do not have access to educational resources, not even the most basic learning experience.

Similarly, there are many people who are keen to pick up a new skill or attain new knowledge but are unable to due to the traditional educational ecosystem. These instances highlight a series of untapped opportunities for potential growth in the market which gives venture capitalists an assurance that investing in edtech startups will bring profitable returns.

2. Wider Acceptance

Edtech platforms help to bridge the gap between those who wish to learn and those who offer their services onto the same platform online. Due to advancing technologies like artificial intelligence and IoT (Internet of Things), the edtech platforms are enabling learners to learn anything, anytime and anywhere, according to their own pace. 

These finer and trending technologies are not only being widely accepted by consumers but are also attracting more investors who want to be in the latest know on emerging technologies. 

3. Learning Is A Lifelong Experience

All of you have heard it before – we need to constantly upgrade ourselves in skills and knowledge so we stay close to indispensable and are able to weatherproof challenging times. Think pandemic and you know what it means. 

New knowledge and skills are so easily accessible nowadays with the click of a button so it creates the demand for lifelong learning, encouraging investors and developers to invest their time and money into developing mobile apps that will be the future of the education industry.

4. Higher Return On Investment (ROI)

The edtech market is growing by leaps and bounds, its solutions are being widely accepted and competition is minimal etc. All these factors give a strong and clear indication that the profit over investment (ROI) is exponentially higher in the online education domain and it can cause regrets for an investor to overlook this opportunity. 

With the pandemic in the midst of being resolved and work from home policies, it looks like the growth in edtech will not be decreasing anytime soon. More and more online courses as well as mobile apps are coming out everyday, it is no wonder the ROI is still at an all time high. 

5. Lower Competition

Why many investors are supporting the idea of mobile app development for education is because in today’s market, there are various subdomains where only 1 or 2 brands are strongly changing the education landscape. 

That means there is lower competition and a higher market share which will lead to a profitable investment. There is a lot of room for growth and akin to healthcare and technology, education is something that everyone always needs so the marketability will not cease. 

In summary, even if everything goes back to the old norm as before the pandemic, learning in a physical environment would not be feasible anymore. It needs to be an integration of both online and offline learning. Edtech is the key to making learning effective and efficient for individuals and companies alike.

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