Tech Industry Trends

K–12 Ed Tech Investments Dive

• By Dian Schaffhauser
• 01/30/20

The latest "2019 Global Learning Technology Investment Patterns" report from Metaari declared that a "breathtaking $18.66 billion flowed to ed tech companies around the world in 2019" — the "highest in the history" of the industry, "[blasting] past the records set between 2015 and 2017 and far [outpacing] the historic high in 2018."

Total global learning tech investment by market segment. Source: "2019 Global Learning Technology Investment Patterns" from Metaari

As Metaari CEO and Chief Researcher Sam Adkins noted, funding for higher ed-specific tech companies increased in 2019 to $740.6 million, 80 percent higher than the $406.8 million given to these companies in 2018.

Meanwhile, funding to the Pre-K–12 sector did the opposite, dropping by almost half in 2019. While investments to Pre-K–12 in 2018 reached $1.4 billion, that declined to $855 million in 2019, a reduction of 39 percent.

Yet, overall, both markets together made up a small fraction of the total investments plowed into ed tech for the year — just 8.6 percent (compared to 21.4 percent in 2017 and 11.2 percent in 2018). Higher ed received 4 percent of total funding for the year, and Pre-K–12 took 4.6 percent.

The cause?

There may not be anything in particular. As Adkins wrote, "Investment trends are inherently unpredictable, and this could be an anomaly."

Total global learning tech investments by learning technology type. Source: "2019 Global Learning Technology Investment Patterns" from Metaari

Likewise, he added, those percentages "are heavily skewed by the massive investments going to consumer and corporate deals." Corporate learning investment drew $10.4 billion for the year (up from $6.2 billion in 2018), while consumer learning investment attracted $6.7 billion (down from $8.6 billion in 2018)

Adkins has divided the ed tech product landscape into 10 broad categories, three that are "legacy" and seven that are "next-generation." Legacy products include self-paced courseware, digital "reference-ware" and collaboration-based learning. The next-generation products cover:

• Cognitive learning;

• Artificial-based learning;

• Mixed reality learning;

• 5G and mobile learning;

• Location-based learning;

• Game-based learning; and

• Educational bots (both physical and virtual).

Adkins' report declared three "big winners" for overall 2019 investments:

• AI-based learning (which attracted $3.7 billion, most obtained by U.S. companies);

• Collaboration-based learning (which wooed $3.3 billion — most going to companies in China); and

• Mobile learning (which won $3 billion); here, the largest investments were drawn by China-based Zhihu, which develops a "homework helper" app, and India-based Aakash Education Services, which does exam prep in person and virtually.

Other next-generation ed tech drew lesser amounts:

• Over $2.6 billion went to mixed reality learning companies — both augmented and virtual — in 2019, up from the $2.2 billion invested in 2018.

• Game-based learning companies attracted $2.5 billion in 2019, up a bit from the $2.25 billion for 2018.

• Cognitive learning, which encompasses products designed to improve brain functions in "relatively healthy people" and products designed to mitigate brain deficiencies or impairments, drew $1.3 billion in 2019, compared to $839 million in 2018.

• Educational bot firms saw less in 2019 ($736.5 million) than 2018 ($1.3 billion). Adkins suggested that highwater mark for 2018 was due to a single deal — the $820 million invested in UBTECH by Chinese multination Tencent.)

• Location-based (also known as spatial computing) learning companies enticed $659 million in 2019, up from $507 million in 2018.

Two of the legacy segments — the reference-ware and self-paced courseware — have been left in the dust over the last year as investors have sought out opportunities with the newer product categories.

In the reference-ware group, nearly $556 million was invested, the report stated, a slight dip from the $570 invested in 2018. As Adkins explained, "It is challenging for developers to generate revenues for this type of learning technology in the presence of a large amount of free content on the market."

In the self-paced courseware category, four companies garnered the bulk of the investment: Coursera, Degreed, FutureLearn and OpenSesame. Combined, they drew $272 million of the $312 million invested in 2019. This was a market that drew a "staggering $2.1 billion in 2015," Adkins pointed out.

More complete details are in the report, which is openly available through the Serious Play Conference website, at which Adkins spoke last year.