After a tough year of toggling between remote and in-person
schooling, many students, teachers and their families feel burned out from
pandemic learning. But companies that market digital learning tools to schools
are enjoying a coronavirus windfall.
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Venture and equity financing for education technology startups has more than
doubled, surging to $12.58 billion worldwide last year from $4.81 billion in
2019, according to a report from CB Insights, a firm that tracks startups and
venture capital.
During the same period, the number of laptops and tablets shipped to US primary
and secondary schools nearly doubled to 26.7 million, from 14 million,
according to data from Futuresource Consulting, a market research company in
Britain.
“We’ve seen a real explosion in demand,” said Michael Boreham, a senior market
analyst at Futuresource. “It’s been a massive, massive sea change out of
necessity.”
But as more districts reopen for in-person instruction, the billions of dollars
that schools and venture capitalists have sunk into education technology are
about to get tested. Some remote learning services, like videoconferencing, may
see their student audiences plummet.
“There’s definitely going to be a shakeout over the next year,” said Matthew
Gross, chief executive of Newsela, a popular reading lesson app for schools.
“I’ve been calling it ‘The Great Ed Tech Crunch.’”
Yet even if the ed-tech market contracts, industry executives say there is no
turning back. The pandemic has accelerated the spread of laptops and learning
apps in schools, they say, normalizing digital education tools for millions of
teachers, students and their families.
“This has sped the adoption of technology in education by easily five to 10
years,” said Michael Chasen, a veteran ed-tech entrepreneur who in 1997
co-founded Blackboard, now one of the largest learning management systems for
schools and colleges. “You can’t train hundreds of thousands of teachers and
millions of students in online education and not expect there to be profound effects.”
Apps that enable online interactions between teachers and students are
reporting extraordinary growth, and investors have followed.
Among the biggest deals, CB Insights said: Zuoyebang, a Chinese ed-tech giant
that offers live online lessons and homework help for students in kindergarten
through 12th grade, raised a total of $2.35 billion last year from investors
including Alibaba and Sequoia Capital China.
Yuanfudao, another Chinese tutoring startup, raised a total of $3.5 billion
from investors like Tencent. And Kahoot, a quiz app from Norway used by
millions of teachers, recently raised about $215 million from SoftBank.
In the United States, some of the largest recent ed-tech deals involved
startups that help educators give and grade assignments, lead lessons or hold
class discussions online. Among them are Newsela and Nearpod, an app that many
teachers use to create live interactive video lessons or take students on
virtual field trips.
“Especially in K-12, so much of learning is sparked through dialogue between
teachers and students,” said Jennifer Carolan, a partner at Reach Capital, a
venture capital firm focused on education that has invested in Nearpod and
Newsela. “We are excited about these products that are really extending the
capabilities of the classroom teachers.”
A number of ed-tech startups reporting record growth had sizable school
audiences before the pandemic. Then last spring, as school districts switched
to remote learning, many education apps hit on a common pandemic growth strategy:
They temporarily made their premium services free to teachers for the rest of
the school year.
“What unfolded from there was massive adoption,” said Tory Patterson, a
managing director at Owl Ventures, a venture capital firm that invests in education
startups like Newsela.
Once the school year ended, he said, ed-tech startups began trying to convert
school districts into paying customers, and “we saw pretty broad-based uptake
of those offers.”
By the end of December, schools were paying for 11 million student accounts on
Newsela, an increase of about 87 percent from 2019. Last month, the startup
announced that it had raised $100 million. Now Newsela is valued at $1 billion,
a milestone that may be common among consumer apps like Instacart and Deliveroo
but is still relatively rare for education apps aimed at US public schools.
Nearpod also reported exponential growth. After making the video lesson app
free, the startup saw its user base surge to 1.2 million teachers at the end of
last year — a fivefold jump over 2019. Nearpod announced that it had agreed to
be acquired by Renaissance, a company that sells academic assessment software
to schools, for $650 million.
Some consumer tech giants that provided free services to schools also reaped
benefits, gaining audience share and getting millions of students accustomed to
using their product.
For instance, the worldwide audience for Google Classroom, Google’s free class
assignment and grading app, has skyrocketed to more than 150 million students
and educators, up from 40 million early last year. And Zoom Video
Communications says it has provided free services during the pandemic to more
than 125,000 schools in 25 countries.
But whether tools that teachers have come to rely on for remote learning can
maintain their popularity will hinge on how useful the apps are in the
classroom.