There has been renewed interest in the “education technology” or “EdTech” sector, as a source of potential solutions for the current challenges facing teaching and learning. The COVID-19 pandemic has impacted education in ways that would have seemed almost unthinkable not that long ago. Entire schools, colleges and universities are closed, exams have been cancelled and there has been a dramatic shift to online teaching for many. Indeed, one estimate puts the number of students now being taught at home at over 770 million globally.
EdTech has actually been thriving for quite a while – as evidenced not least by the number of mergers and acquisitions that have been taking place across the sector and the wider education landscape. These innovators are not just looking to replace more traditional businesses with an online offering. Like the best disruptors they want to do it better and a great example are those creating a bespoke learning journey for each individual.
Three trends in particular have been driving EdTech M&A in recent years: publishers looking to reposition their offering to be fit for purpose now and in the future, start-ups seeking to capture market share with customers who are notoriously conservative, and private equity attempting to secure a slice of the (increasingly valuable) action.
Schools in the UK spend around £900 million a year on EdTech, whilst globally it’s a sector set to be worth £128 billion this year – a startling increase from £45 billion in 2015. But with traditional education publishers having been slow to move into EdTech, the area has become dominated by start-ups.
The current pandemic will drive an acceleration of new technology and approaches in a shorter timeframe than the education sector is known for. Some players like AI driven learning provider CENTURY were quick to make a free version of their product available to stressed home schooling parents which will surely help secure future deals with schools. Necessity may really be the mother of adoption.
As these start-ups look to scale and the sector as a whole continues to grow, private equity has taken an increasing interest in making acquisitions. EdTech combines the Private Equity ideals of great scalability and sticky customers. EdTech should receive a boost from the current pandemic. But its existing and future success derives from secular trends which run much deeper. It seems likely, therefore, that EdTech will continue to see more M&A activity.