Post-Secondary Trending Now: An Impenetrable EdTech ‘Bubble’?

C’mon, what’s a few million dollars between friends?

Sorry to burst your bubble: it appears that the ballooning edtech industry continues to grow even several years after critics predicted its downfall.

The claims, reminiscent of the tech boom of the late 90s and early 2000s, weren’t being leveled by media outliers, either. GeekWire, EdSurge, Inside Higher Ed, and even The Atlantic have all speculated on the ‘boom now, bust inevitable’ market.

Despite the conjecture, edtech investors appear to be bullish. By the end of 2015, companies targeting the higher education market had amassed a whopping $711m in funding. And while investments even declined slightly from EoY 2013 to EoY 2014, they were back in full force as of last year—increasing by 43%.

Seed and angel funding deals were up on average by 15%, from $934,000 to a cool $1.1m. Average Series A and Series B funding deals were $5.5m and $32.5m, respectively. (Source: edSurge.) Based on the hefty latter figure, it looks like companies are being encouraged and supported to scale up quickly once they’ve reached an acceptable market proliferation or customer base.

One thing is clear: online learning is here to stay.

What was once considered a new-fangled, trendy or an ancillary delivery format is now disrupting the industry of higher ed—and in many cases, putting students in the driver’s seat.

For example, if you haven’t heard of HotChalk, now’s the time to Google it. Founded in 2004, the California-based company collected a staggering $230m in the top postsecondary edtech investment last year. Their value proposition? Providing colleges and universities with ‘turnkey solutions’ to put degree programs online, helping institutions by offloading what could be a major operational lift—all in order to create new (or reinvigorate existing) online degree programs.

Udacity, provider of free online programs and ‘nanodegrees’—those hyper-focused ‘industry-recognized’ microcredentials—landed the second largest deal at $105m. The company is eyeing a growing talent market that seeks to expand skillsets or change careers altogether. Students in one of Udacity’s programs can even receive a money-back guarantee; get hired within six months of graduating, or receive a 100% refund! Too good to be true? There is some fine print, but a lion’s share of the confidence may lay in the disciplines to be studied: how many unemployed senior web/iOS/Android developers or machine learning engineers do you know?

Udemy (seeing a pattern, here?) calls to lifelong learners across the globe by asking ‘what course will your life take?’ With 10 million students, 40,000 courses and multi-device learning, the company just might be seeking world domination. You can learn Portuguese, take blogging tips from a 17-year-old, absorb fashion design courses, brush up on Calculus or try your hand at baking sourdough bread from scratch. (Yes, I’m serious.)

Yet there might be something of significance in all of this—and not just because a VC or equity firm deemed it worth a commitment of $65m.

In an increasingly competitive global job market with an ever-growing array of coding languages, SaaS tools and technologies, a small investment for programming or photography tutorials may offer some solid returns.

 

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