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The education landscape is witnessing a transformative shift, bringing unprecedented opportunities and challenges. Data from the Founders Forum Future of EdTech Report shows that from 2018-2022, there have been 10,600+ investments totalling over US$62.2 billion ($84.6 billion) in global educational technology (EdTech) startups by VCs.

Against this dynamic landscape, the rise of a new wave of EdTech startups is poised to bring innovations that will revolutionise how teaching and learning are delivered.

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Despite this potential, only a fraction of education is delivered digitally. Edtech adoption has been contingent on how these technologies can support traditional pedagogies for years. However, with the rise of generative artificial intelligence (AI), personalised learning is now emerging as technology allows educators to tailor educational experiences to individuals. In 2024, we will see meaningful momentum behind EdTech as these advancements gain traction.

Now, the pivotal question arises: what will the future of education look like when supercharged by EdTech? While it is challenging to predict, several trends and indicators provide insights into potential outcomes, many of which fueled our discussions at this year’s Founders Forum Asia.

Opportunities in the EdTech space   

Today, emerging technologies and trends like the metaverse, AI, VR/AR, and gamification are making the education business dynamic and innovative. Generative AI has emerged as a game-changing technology in modern education. With its capacity to analyse vast datasets and tailor content to individual requirements, AI has created an opportunity for EdTech startups to transform education with truly personalised learning. 

What was once perceived as a threat to education is now increasingly recognised as an opportunity for innovation. We have increasingly seen education institutions adopt technological resources and solutions from EdTech startups that lead to better holistic outcomes for both teachers and learners. Through thoughtful public-private partnerships and working closely with these traditional education providers, EdTech startups are poised to accelerate the adoption and deployment of new technologies like AI.

Beyond established structures, Web3 technology like NFTs and blockchain can enable decentralised systems that empower educators. TinyTap, a leading EdTech platform for user-generated educational games, is working with Open Campus to provide educators with earning opportunities and ownership of their own content. Teachers can make more money, incentivising them to create higher-quality content and promoting a more equitable educational system that rewards educators for their efforts.

The need to upskill and reskill the workforce has also become more critical than ever in the age of AI. The World Economic Forum’s 2023 Future of Jobs Report predicted that skills gaps in local labour markets will be the foremost barrier towards industry transformation and optimised business performance. EdTech startups like TalentGarden have a real opportunity to provide solutions that can facilitate effective reskilling and upskilling strategies, bridging the gap between demand and the evolving skills landscape.

What investors are looking for

Our report shows that investment in global EdTech startups has returned to pre-2018 levels — around US$5 billion — following a spike of US$20 billion in 2021. Valuations, investment totals, and the number of overall deals in the market have dropped, signalling the maturation of the EdTech market as decision-making processes slow down and VCs become more discerning. 

Today, investors are still looking for opportunities to invest in EdTech companies with a strong value proposition. This raises the question of how startups can set themselves apart from their competitors to receive funding, enabling them to scale up and fulfil their potential. AI is undoubtedly a transformative technology. However, AI has become table stakes, especially in today’s EdTech landscape, where seemingly every startup is leveraging AI in some shape or form. However, the true potential of AI lies in its ability to drive transformative change on a mass level. 

For example, China-based VIPKid is utilising AI as a force multiplier by leveraging its proprietary data and existing user base, which has accumulated over 10 years, to improve teachers’ productivity. If a startup does not have a real path to form a critical mass of users or data like VIPKid, it’s hard for investors to see how AI meaningfully improves the offering.

Investors are also looking for measurable educational outcomes that demonstrate the quantifiable value of EdTech startups. In our Future of EdTech report, Jason Horne and Michael Cohn from GSV Ventures pointed to the example of US-based Dreamscape Learn. They observed a significant improvement of two to three grade levels by incorporating a 20-minute weekly VR lab into an introductory biology course, reaching 8,000 learners with expanded college-level STEM courseware. Providing clear and measurable outcomes can pique the interest of potential investors looking at hard data to inform their decisions.

Lastly, like any other business in the education space, startups must contend with the challenges inherent to the industry. B2B EdTech companies must navigate long sales cycles when selling to traditional educational institutions. Conversely, with B2C EdTech, the challenge lies in user acquisition and scale.

Education channel English with Lucy has leveraged its social media following to generate significant revenue by converting them into paid subscribers for its English language courses. It is a straightforward product, but it can stand out from other companies in the same space by demonstrating fundamentals like low customer acquisition costs, low overheads, and product demand.

The promise of EdTech is that learning is no longer confined to the walls of a classroom, empowering teachers and learners to embark on a personalised journey of discovery. However, to stand out in this competitive landscape, startups must harness transformative technologies like AI and demonstrate a clear ability to deliver measurable outcomes that resonate with investors and users.

As innovation continues to drive progress in EdTech, companies that can adeptly navigate shifting market dynamics and deliver tangible results are poised not only to thrive but also to shape the very future of education itself.