Featured Article

To win post-pandemic, edtech needs to start thinking big

After a noisy 2020, can the sector maintain momentum?


light bulb flickering on and off
Image Credits: Bryce Durbin / TechCrunch

The edtech market raked in more than $10 billion in venture capital investment globally in 2020, but for students, parents and teachers, the year was defined more by its scramble than its surge.

Nandini Talwar, a student and teacher’s assistant at Columbia University, wants to hold more efficient office hours so students don’t have to wait on a Zoom call. TraLiza King, a director at PWC and single mother, needs a Zoom alternative for her 4-year-old, who is too young to understand how to mute and unmute. Brian Kinglsey, chief academic officer at Charlotte-Mecklenburg Schools in North Carolina, is looking for ways to reengage remote students that don’t require socially distant home visits.

Naturally, any company that shifts overnight from being a tool to a necessity will have growing pains, and edtech as a sector is no exception. Startups with the long-term ambitions of solving education’s inequities had to come up with quick fixes that would serve millions of learners. A sector that was notoriously undercapitalized had to reach venture scale while adapting to the realities of a remote work landscape like never before. As schools seesawed between hybrid and remote, education technology companies had to be nimble as well. The ubiquity of remote learning surely brought a boom to new users, but may have in fact limited the sector’s ability to innovate in lieu of fast, easy scale.

For edtech in 2020, flexible and scrappy was a survival tactic that led to profits, growth and most of all, aha moments that technology was needed in the way we learn. Now, as we enter the rest of the decade, the sector will have to shake off its short-term-fix mentality to evolve from tunnel vision to wide-pan ambition.

The innovation that must grow

If nothing else is clear after a tumultuous remote learning experience, it’s that the world needs effective and accessible technology that allows education to scale with learning for all in mind. In fact, the comeback story and surges of massive open online course providers (MOOCS) shows how in-demand digital curricula truly are.

However, usage is not a replacement for effectiveness. In reality, most people don’t have the drive, motivation or comprehension capabilities to learn from a one-hour lecture — even if they technically show up.

The mad rush to track engagement is underway. In the past few months, Zovio launched Signalz, a tool that helps universities track student engagement and see who is most at risk for dropping out of courses. Piazza also launched a tool focused on college and high school student participation that allows instructors to send personalized messages and measure activity on their assignments. There’s also Rhithm, an app that allows educators to check in daily with students for emotional-learning insights, and Edsights, a chatbot for undergraduate students. 

Still, instead of bringing the classroom experience online and trying to track the heck out of it, what if you completely upend it? The answer might begin with flashcards.

Quizlet, which started off as a flashcard app, has spent the past three years building out its artificial-intelligence-powered tutoring arm. CEO Matthew Glotzbach says the feature is now the most-used Quizlet offering, signaling how students want a more in-depth solution than flashcards.

The most recent example I saw of innovation was Sketchy, a startup that teaches medical concepts through illustrations. It allows students to skip notecards and textbooks and comprehend through animated videos; think of a countryside kingdom scene about coronavirus or a salmon dinner about salmonella.

While the technology itself isn’t from Mars, Sketchy’s strategy does what many edtech solutions don’t: learning theory. The company uses the memory-palace technique to help students replace textbooks with videos and actually retain information. Plus, after seven years as a bootstrapped company, Sketchy just raised $30 million dollars in venture capital. The round was led by TCG with involvement from Reach Capital.

Zach Sims, the founder of Codecademy, told me that the startups that will “win” the next wave are the ones that are “using interactivity and technology to create an educational experience you just couldn’t have in the classroom.”

To retain recent gains, edtech companies need to replicate Sketchy’s strategy: Replace outdated systems and methods with new, tech-powered solutions. No more of the endless bundling and unbundling of the school experience. As we evolve into a world of life-long learning and cohort-based learning platforms, founders will need to be especially innovative with the way they deliver content. Don’t simply put engaging content on a screen, but innovate on what that screen looks like, tracks and offers. Is it rooted in true learning principles, or is it just a repacked lecture?

In other words, if 2020 showed us how hard “Zoom school” really is, then 2021 should not be about creating more versions of Zoom schools. It should be about playing an entirely different universe.

Image Credits: Bryce Durbin

The hurdle that remains

The biggest elephant in the room for edtech is the one that every human in the world can’t wait for: the end of the coronavirus pandemic. And with promising vaccine news, the light at the end of the tunnel certainly feels within reach for those who dare to dream.

When the world recovers, startups that have based their entire business around remote learning and remote work will likely see a drop in usage. The surge will slow, and everyone in edtech is wondering how to extract post-pandemic value.

This in mind, Ashley Bittner, co-founding partner of Firework Ventures, a new future of work fund, thinks that the next generation of edtech founders should continue to make moonshot bets, but be realistic about what will work for the decades ahead.

“Anyone can pitch an idea about how we should do math curriculum,” she said. “But there’s a reason behind why we teach kids to do it this way. I don’t think there’s enough respect for the experience learning science behind products.”

Bittner thinks the onus is on investors to inject money into the right kinds of edtech startups.

“You don’t invest in biotech or healthcare casually,” said Bittner. “Edtech is not that far from those categories with the regulatory environment.”

Bittner’s point underscores the reality that investors have a huge controlling power regarding which edtech startups will be put on a successful trajectory. The question then becomes: Do the most ambitious edtech businesses of the future make sense as a venture capital investment?

Ideally, yes. Venture capital has the ability to allow companies to blitzscale, and in education, that scale can have a generational impact unlike many other categories. But, incentives matter.

Jomayra Herrera, an investor at Cowboy Ventures who backs the future of work and education businesses, says some businesses — such as a reskilling program for a population that needs significant support — doesn’t scale and nor should it. In other words, if the incentives are for a company to grow as fast as possible and as cheaply as possible, it might not make sense when it comes to something as emotional and raw as education.

Edtech investors are panning for gold

“If it’s expensive to serve your population of students … and it takes a lot of time and it shouldn’t be rushed like a three-month or six-month or a nine-month process, you shouldn’t be venture backed,” she said. “And that’s totally fine.”

The type of edtech businesses that have historically made sense from a venture perspective are quite few and far between. Not every company is able to have an insane, outsized return. In venture, there needs to be opportunity for rapid scale, a huge market size and gross margins.

This is true for all sectors, but especially in education. Schools and higher education institutes have long sales cycles and difficult budgets (and while the pandemic has slightly shifted budgets, it’s unclear how long the flexibility will remain). Consumer businesses, meanwhile, can get viral-like growth.

It’s important to remember that while the pandemic has made it easier to get consumers, it has not yet erased the red tape that defines the United States education system. Since venture is a 10-year horizon, it makes sense that generalist firms and edtech firms are investing into consumer businesses that may have a more viral-like ability to win.

The danger here is that the current wave of venture capital is putting millions into startups that require consumers to buy hardware. This can create big companies and lost children, left behind by paid tech they can’t afford to access. A more equitable solution for students would be if startups worked with enterprises, which then can take the burden off of individuals and onto institutions.

A counterpoint is Guild Education, which balances three stakeholders: companies, employers and colleges. The for-profit company helps companies offer employee benefit programs that place their hires into college degrees for credentials at a subsidized rate. This sort of closed-loop system, that helps everyone scale at the same time, is one example of an equitable solution with venture potential.

hands signing check
Image Credits: Bryce Durbin/TechCrunch

The hope to be found

By this point, I hope you’ve seen how difficult it is for venture-backed edtech to completely shake off its short-term mindset, from both a coronavirus and profit-seeking perspective. I find hope in the fact that Sketchy, for example, didn’t have to raise money for seven years because it found a product-market fit to make something that people actually want, to quote Y Combinator.

My hope is two-fold. First, there has been record-breaking venture capital brought to a sector that’s been historically underinvested.

PitchBook data shows that edtech startups around the world have raised $10.76 billion in venture capital in 2020, compared to $4.7 billion in 2019. While reporting delays could shift this total, venture capital dollars have more than doubled in just one year. Edtech startups in the United States raised $1.78 billion in venture capital this year across 265 deals. The dollar value is up from 2019, which brought in $1.32 billion.

From both a global and domestic point of view, deal count has lessened even as dollar volume soars. It means fewer startups are raising, but those that can have been able to raise more money. This isn’t necessarily bad news, despite this reductive Wired take.  I don’t think VCs are putting capital in the wrong edtech startups. I simply think that venture capital will create safety blankets for startups and allow them to risk profit in lieu of more ambition.

My second silver lining is that this year brought unavoidable, and often existential, aha moments to all of us. The digital divide still very much exists, leaving students to find WiFi in McDonald’s parking lots or coffee shops.

There have been promising strides made from the state level. Connecticut, for example, is giving every student their own computer and access to the internet. Dr. Quentin J. Lee, the principal of Childersburg High School, personally went to students’ homes to drop off hotspots. These stories aren’t just gestures of goodwill, they indicate a move to where a 1:1 student-to-laptop ratio is a necessity, not an option.

2020 was certainly a historical and iconic year for edtech. But, the best spotlights bring scrutiny that inspires others to do better.

Sketchy wants to replace boring textbooks with ‘Pixar-like’ videos

More TechCrunch

Ahead of the AI safety summit kicking off in Seoul, South Korea later this week, its co-host the United Kingdom is expanding its own efforts in the field. The AI…

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

8 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities