The 2011 Review of Education Capital reported that state-maintained schools in England and Wales spent £487 million on ICT in 2009-2010 but the official report could find no evidence that had resulted in any improvement in student education.
The report’s findings demonstrate two things: there is a lot of money in education technology (ed tech) and schools and governments are willing to spend even in the absence of robust evidence of efficacy.
Yet according to investment firm IBIS Capital, Europe is under spending on e-learning compared with the U.S. “Since 2007, 60% of global venture investments in e-learning have been in the U.S.,” the company wrote in a 2013 report. “Europe only accounts for 6% over the same period.” The London-based company said the global education expenditure market is projected to grow at 7.4% until 2017, and the highest growth in that market will be the K-12 (primary and secondary) school sector, with a compound annual growth rate of 34%.
With that kind of growth, not surprisingly start-ups are flooding in. But Ian Fordham, the Director of the Edtech Incubator, Europe’s first ed tech accelerator, warns that while global educational spend in 2011 was just under $4 trillion, a lot is tied up in staff and buildings.
“The sort of discretionary teaching budget for non-core technology in a primary school in the UK is about £20,000, and maybe £50,00060,000 for a secondary,” says Fordham. “If you are talking about the formal school budget for curriculum, it is a lot more than that. If you think there are about 30,000 primary schools and 4,000 secondary, it’s still a significant amount of money.”
Have To Have Teachers On Board
Start-ups should focus on problems that are truly global and not just seek to digitize existing processes, advises Fordham. “If it’s a universal issue that is affecting millions of teachers, not just in the UK but globally, then it has major potential,” he says. “Every teacher sets homework, or has to manage discipline.” And, with the increasing emphasis on teaching code, teachers are struggling. “Helping teachers get to grips with the new computer science curriculum would be a good place to start.”
Seeking the aid of teachers is essential for start-ups targeting schools as customers. Fordham says 40% of investments in California-based ed tech start-ups went to teams led by a teacher.
While formal education offers the largest opportunities, so-called out-of-hours activities, apps designed to support what goes on in the classroom but in a pupil’s own time, offered an alternative, and maybe easier, market to tackle.
One London-based ed tech start up that has been successful is Quipper. The company, which is backed by London VC firm Atomico and other investors has raised $10 million, provides web-based quizzes and services as well as iOS apps to support teaching out of the classroom. Content manger Anthony Good says the team, which comes from Japan and has successfully targeted schools in the Philippines, chose London because “it is important to attract the best people you can.”
“How Do These Companies Grow To £100 million”?
While selling into schools can be hard (although the Philippines education system is apparently less bureaucratic than that in the UK) Good cautioned against thinking it was easier to build apps for non-formal, life-long learning, such as language apps for adults. “That is a highly fractured market,” he says. “Customer acquisition costs are going to be very high.”
IBIS’s research would back up his claim. While education apps were the third-largest category of free app downloads (after news and travel), that dropped to sixth when it came to paid-for apps, making some investors skeptical.
“How do these companies grow from £10 million and £20 million, to £100 million companies?” asks Scott Sage, a partner at VC firm DFJ Esprit. His company has no ed tech investments in its current portfolio but Sage, who has personal investments in the sector, believes there is great potential in areas such as adaptive learning, where computers learn how children respond to questions and use that to direct their learning,
While investors are placing their bets in different areas of ed tech they agree on one thing: while ed tech can help teachers do their jobs better, nothing is going to replace great teachers.
• Education practitioners in EdTech will come together on Monday 16th June at Somerset House at ‘RE.WORK: The Future of Innovation’ to discover how technology is impacting education. Speakers include Will Pearson, Director of Technology at Ravensbourne and Bethany Koby, co-founder of Technology Will Save Us. On Tuesday 17th June Dragon Hall will launch its tech hub at ‘Techday — Bridging the Digital Divide for Children and Young People.’