It’s been a couple of months since I last sparked some plugs! But I am back because the world is becoming more interesting every day this year. 🤭
Meta, Spotify, Paypal - big news😱, all of them lost market cap either because of a drop in revenue (for Meta) or lowered projections for the upcoming year. Now, this could come as a big surprise to many of us tech enthusiasts, but the tech stocks world is not as rosy🌹. A ton of startups that went for an IPO in the past (let’s say) 5 years have not been doing well at all! I was a pretty big fan of UIPath myself, but they’ve been trading at $34 per share when they started with $74, that’s at least half of their originally assumed market cap🤯. Pre-IPOs or tech startups that are scaling and raising seed and series A to C are probably going to burst a bubble 🎈. While the average deal size has been growing (with pension funds and Universities contributing to VC funds, I take that as an omen), the revenues aren’t as bombastic 🤦♀️.
(🤷Why are you telling me all this Daniela?) Well, edtech is not that different. While the technology is often cutting edge, the sector is losing in the long-term (in my opinion) because of the way it projects its estimates to the rest of the world, i.e. to the financing system. Of course, conservative market size numbers might not attract enough checks, but students aren’t big spenders, and universities are not corporates. Cycles are long, money is always tight 🙆.
📊Quite fortuitously, I came across this visual from Christopher Nyren, the founder of Educated Ventures. He breaks down all 36 education-focused companies that are trading on the stock exchanges. Not one of them has seen an increase in its value or market capitalization since IPO. And the worst offenders are losing 64% on average⚠️. These are the newest edtechs in the micro-credentials space, language learning, and test prep or tutoring support. In fact, a hefty part of the $28B in funding collectively raised by 33 edtech unicorns went into these areas 4 areas.
And despite this meagre outlook, edtech had another record-breaking year! 💰💰💰 $20 BILLION raised, up from $16B in 2020 (>double the 2019 $7B figure). Investment in China decreased radically, as expected after the government introduced restrictions on IPO and international fundraising for local education-focused startups.
🤑Funding almost quadrupled in the US and doubled in India. And while China’s restrictions were intended to address the K12 edtechs, and regulate the fees parents and students would have to pay, in order to ensure education remains affordable for most people; India is dealing with a rise in startups that offer degrees and certification at the higher education level. 🕊️This is a classic liberal trade scenario. Your local industry is squeezed out, then prices start rising ☝️.
India has top-notch institutes, and it is taking steps to protect these. 🏛️The government and education regulators warned universities and edtechs that edtech companies cannot be involved in offering courses for diplomas or degrees 🎓 that sit within the domain of accredited higher education institutions.
We have given approvals to universities and colleges to offer degree and diploma programmes but they are supposed to offer it on their own and not piggyback on private companies or outsource their job to any third party", chairman of the All India Council for Technical Education.
The Ministry of Education also asked students and parents to watch what they are paying edtechs for. This is just a warning, and there isn’t any slap-on-the-wrist policy as yet, but I will not be surprised if one comes out this year.
All the while, in the UK and US, and everywhere around the world, the number of BootCamp and micro-credential partnerships with universities is on the rise⬆️, with nearly 80% growth in 2021. There were close to 600 such partnerships to accelerate digital skills. And since 2010, universities engaged in more than two thousand partnerships with online degree programs 🤹.
⁉️This begs the question. What happens to universities, if they aren’t the conduit for learning or the curators of content through teaching; if companies start doing that, then what is the role of universities in the learning space.