The Future Of EdTech May Very Well Be in Emerging Markets

With everything happening in the world, under the threat of global recession, investments seem pretty risky. But some industries continue to grow even in unstable times. One such area I’m seeing investors seem to be interested in is edtech.

I have been in the educational business for almost 10 years, helping create new products and expanding to new markets. Over this time, I’ve made many mistakes and came to some conclusions. The most important among them: The first steps should always include research and idea validation. It helps minimize risks and make the right decisions. And that’s why I believe that edtech will continue to develop and grow in the future. Numbers say so, too.

Let’s look at the numbers

The value of the global edtech market in 2021 was $106.46 billion, and it’s just the beginning. From 2022 to 2030, this market is expected to grow annually by 16.5% and is expected to expand 2.5 times from 2019 to 2025, up to $404 billion in 2025.

The biggest piece of this pie belongs to North America: In 2021, this region received 35% of the global revenue in part because of its significant investments in edtech. At the same time, the Asia Pacific region has been growing the fastest: Its compound annual growth rate is expected to be 19% from 2022 to 2030. Partly due to the increasing number of smart devices in India and other developing countries.

The quantity of edtech unicorns is increasing at high speed. Over the last two years, their number almost doubled. As of July 29, 2022, there were __36 edtech unicorns__globally. Together, they have raised more than $30 billion over the last decade. The total market value of these companies has reached $105 billion. There are eight edtech unicorns in China, 16 in the USA and seven in India.

The industry’s growth in undeniable. In 2010, it raised only $500 million of venture capital globally. And in 2021, this number skyrocketed to $16.1 billion (a 32x growth).

What’s driving edtech growth?

A significant part of venture investments was made in professional or corporate education and upskilling. In 2020, 48% of investment deals belonged to the workforce education segment, 33% in K-12 and 16% in higher education.

The world is changing and employees need new skills to keep their jobs or find better ones. Also, people have begun changing their occupations in search of higher salaries and more perspectives. The IT industry seems attractive because the demand for software developers is enormous. For example, the U.S. Bureau of Labor Statistics expects the number of job openings to grow by 22.2% by the end of the decade. What’s more, I see online programming courses and other edtech tools drawing a clear path for people who want to enter the IT market.

I believe another contributor to edtech’s fast growth is the increasing number of mobile devices that allow people to study and even work using smartphones or tablets. The pandemic also gave momentum to the dashing edtech development. Millions of students started learning online and new forms of remote education appeared in the blink of an eye.

Innovations in edtech are driving growth as well. For example, online courses often use gamification to keep the students’ attention and maintain their motivation. According to the TalentLMS survey, 84% of respondents believe that gamification makes them more engaged, and 85% claim they would spend more time using software if it’s gamified. In the coming years, I think we’ll definitely see more and more startups built on the gamification concept.

What’s next?

I believe edtech will continue to grow. And this is something all the experts seem to agree on (even if their quantitative predictions vary). For example, according to the World Economic Forum (WEF), in 2020, there were 71 million registered students at Coursera. In 2021, this number increased to 92 million. I expect this trend to deepen.

I predict that we will see new products and services appear, including online courses with augmented or extended reality. But, of course, edtech isn’t entirely risk-free. This segment is facing several challenges. For example, edtech companies can’t rest even for a day. They must keep up with new technological advancements. An online course, for instance, shouldn’t be something unchangeable, but rather be able to evolve. Not every company is capable of working at such speed. Also, smaller companies and promising startups may not be able to compete with huge corporations entering the edtech market. At the same time, if a startup offers a truly unique product, its positions are much safer even in the saturated market.

Another significant challenge is data privacy. Customers should be able to trust an online course provider, and it’s possible only if the company can guarantee the security of data collection, processing and storage.

Nevertheless, I believe there is huge potential for edtech. As I’ve mentioned above, we’ll see the edtech market skyrocketing in the next few years. Large successful markets like the U.S. will grow, as well as developing markets (the Philippines, Indonesia, etc.). I think we’ll soon witness the next boom in Southeast Asia, and companies should pay more attention to this region. I believe businesses can benefit from researching the developing markets, learning about their culture and trying to build local multicultural teams.