The COVID-19 pandemic had a significant impact on the edtech market, with schools, further education institutions and corporates switching to remote learning, in some cases quite literally overnight. As a result, edtech is now firmly in the mainstream and there is no sign that this will reverse in 2022 or beyond.
After this period of revolution in which many different businesses were successful, it is likely that we’ll see a period of intense competition and consolidation. Investors are now having to be very selective when choosing where to invest within the market – so what are they looking out for?
The future of corporate e-learning
One thing investors expect to see more of in 2022 is ‘learning in the flow of work’. This involves accessing, quickly and easily, an answer or a short piece of learning content while you are working. Even better if it’s directly relevant to a task you’re currently working on or thinking about preparing for. To deliver this, ‘learning in the flow of work’ has to fit seamlessly into the working day. Investors will be on the lookout for cutting edge businesses that make this happen. That can be the platform to deliver content quickly and efficiently, or technology that recognises a moment of need and serves up relevant content.
We’re also seeing the convergence of Learning Experience Platforms (LXPs) with the better established Learning Management System (LMS) propositions. This will be a key battleground over the next few years.
LMSs will look to improve their user experience to maintain their position in heavy admin and compliance-driven segments. Many LMSs have under-invested in their front-end and customers are becoming less and less forgiving of training programs that look very dated. LMS businesses that address this are likely to maintain their advantage in ‘must-do’ training, covering areas such as internal policies, compliance, or the onboarding of new employees. Ultimately, the top buyer consideration is often strong administrative tools to help Learning & Development teams manage learning programs, select, and assign content, and use data to assess learners’ progress, for example. Their look and feel just need to be ‘good enough’!
LXPs have started from the opposite end of the spectrum. Their front-end interfaces tend to be well presented, like Netflix, while the systems’ back ends generate content recommendations based on the user’s goals, experiences, preferences, and history. Whilst LXP platforms are much more personalised, most do not currently possess all the administrative functions to efficiently deliver training programs across a whole business. So customers often have to layer an LXP on top of their existing LMS. That’s not cost-efficient and often has integration challenges. Investors are looking for LXPs that are starting to bridge this gap and have enough administrative functionality to be the single central learning platform.
This is a complex and fast-moving picture, so customers are increasingly looking for strategic partnerships in e-learning to help them navigate it. Investors are on the lookout for providers that can stitch together platform, service and content to provide an end-to-end solution. Importantly, they can own responsibility for delivery of a full learning program. Too often customers are managing multiple vendors who point the finger at each other when things go wrong. If providers can build that relationship as a strategic partner to their customers, then they are well-placed to deliver return on investment and build a sticky customer base.
HR solutions delivering learning
End-to-end HR solutions will also play an important role in the edtech space in the year ahead, as businesses continue to prioritise staff engagement and retention. There is a strong case to integrate HR Information System and e-learning platforms – it creates a richer dataset from which to personalise learning. This kind of proposition already exists, but historically it has been reserved for the large enterprise segment only. But this is beginning to change. For example, businesses like CIPHR, have created a joined-up proposition for SMEs. Customers can offer their employees a better user experience by making sure their learning is integrated with the HR profile, for example for review rounds. Looking forwards, the technology will enable organisations to deliver more engaging, personalised learning journeys that are tied very directly to career progression. From the customer point of view, they can take a holistic view of employee management on one platform – employee information management, recruitment, onboarding and offboarding, as well as employee engagement. Providers getting traction for this approach in the SME segment have a huge market opportunity and will be attractive for investment.
The future of edtech in schools and nurseries
Schools and nurseries have historically been more conservative in their adoption of edtech than corporates, but COVID-19 drove five-10 years of progress in 18 months. There are now plenty of businesses that can demonstrate traction, but the key for investors is to see good evidence of the potential for mass adoption. In the UK, we typically see the tipping point for this at a few thousand sites. Once a great product reaches this scale, school leaders tend to refer each other and sales kick into overdrive. Before this scale is reached, the sales cycle can be very intensive and that kills profitability. Plenty of good businesses never make it.
CPOMS is a great case study of success. It was the first innovator of SaaS safeguarding software, and its early sales efforts created the market. Once it grew a strong presence in a few regional areas, word quickly began to spread. It became clear that every school should move safeguarding off pen and paper, and CPOMS had the best product with market-leading net promoter scores. It grew from 5,000 schools to 14,000 schools in just a few years. It is now repeating that success with a new product, Staff Safe, which allows schools to upload, keep, record, and govern all information regarding adults working within a school setting.
The challenge for investors is to uncover the next CPOMS.
Winners and losers as competition intensifies
Prior to COVID-19, there was already steady growth in edtech adoption across both educational and business settings, but this was rapidly accelerated by the pandemic. As we slowly return to normality, the edtech market has demonstrated significant post-pandemic resilience. However, whilst COVID-19 created a period of many winners in edtech, that can’t last forever. As competition continues to intensify, investors will pick out businesses that are playing into key themes in the next phase of market maturation.
Rory Nath is an Investment Director at ECI Partners, a leading growth-focused mid-market private equity firm.
Read more: Brand new Philips E-Line interactive education displays unveiled
Advertisement / Google
Advertisement / Google
An investors’ outlook at edtech in 2022
Rory Nath
The COVID-19 pandemic had a significant impact on the edtech market, with schools, further education institutions and corporates switching to remote learning, in some cases quite literally overnight. As a result, edtech is now firmly in the mainstream and there is no sign that this will reverse in 2022 or beyond.
After this period of revolution in which many different businesses were successful, it is likely that we’ll see a period of intense competition and consolidation. Investors are now having to be very selective when choosing where to invest within the market – so what are they looking out for?
The future of corporate e-learning
One thing investors expect to see more of in 2022 is ‘learning in the flow of work’. This involves accessing, quickly and easily, an answer or a short piece of learning content while you are working. Even better if it’s directly relevant to a task you’re currently working on or thinking about preparing for. To deliver this, ‘learning in the flow of work’ has to fit seamlessly into the working day. Investors will be on the lookout for cutting edge businesses that make this happen. That can be the platform to deliver content quickly and efficiently, or technology that recognises a moment of need and serves up relevant content.
We’re also seeing the convergence of Learning Experience Platforms (LXPs) with the better established Learning Management System (LMS) propositions. This will be a key battleground over the next few years.
LMSs will look to improve their user experience to maintain their position in heavy admin and compliance-driven segments. Many LMSs have under-invested in their front-end and customers are becoming less and less forgiving of training programs that look very dated. LMS businesses that address this are likely to maintain their advantage in ‘must-do’ training, covering areas such as internal policies, compliance, or the onboarding of new employees. Ultimately, the top buyer consideration is often strong administrative tools to help Learning & Development teams manage learning programs, select, and assign content, and use data to assess learners’ progress, for example. Their look and feel just need to be ‘good enough’!
LXPs have started from the opposite end of the spectrum. Their front-end interfaces tend to be well presented, like Netflix, while the systems’ back ends generate content recommendations based on the user’s goals, experiences, preferences, and history. Whilst LXP platforms are much more personalised, most do not currently possess all the administrative functions to efficiently deliver training programs across a whole business. So customers often have to layer an LXP on top of their existing LMS. That’s not cost-efficient and often has integration challenges. Investors are looking for LXPs that are starting to bridge this gap and have enough administrative functionality to be the single central learning platform.
This is a complex and fast-moving picture, so customers are increasingly looking for strategic partnerships in e-learning to help them navigate it. Investors are on the lookout for providers that can stitch together platform, service and content to provide an end-to-end solution. Importantly, they can own responsibility for delivery of a full learning program. Too often customers are managing multiple vendors who point the finger at each other when things go wrong. If providers can build that relationship as a strategic partner to their customers, then they are well-placed to deliver return on investment and build a sticky customer base.
HR solutions delivering learning
End-to-end HR solutions will also play an important role in the edtech space in the year ahead, as businesses continue to prioritise staff engagement and retention. There is a strong case to integrate HR Information System and e-learning platforms – it creates a richer dataset from which to personalise learning. This kind of proposition already exists, but historically it has been reserved for the large enterprise segment only. But this is beginning to change. For example, businesses like CIPHR, have created a joined-up proposition for SMEs. Customers can offer their employees a better user experience by making sure their learning is integrated with the HR profile, for example for review rounds. Looking forwards, the technology will enable organisations to deliver more engaging, personalised learning journeys that are tied very directly to career progression. From the customer point of view, they can take a holistic view of employee management on one platform – employee information management, recruitment, onboarding and offboarding, as well as employee engagement. Providers getting traction for this approach in the SME segment have a huge market opportunity and will be attractive for investment.
The future of edtech in schools and nurseries
Schools and nurseries have historically been more conservative in their adoption of edtech than corporates, but COVID-19 drove five-10 years of progress in 18 months. There are now plenty of businesses that can demonstrate traction, but the key for investors is to see good evidence of the potential for mass adoption. In the UK, we typically see the tipping point for this at a few thousand sites. Once a great product reaches this scale, school leaders tend to refer each other and sales kick into overdrive. Before this scale is reached, the sales cycle can be very intensive and that kills profitability. Plenty of good businesses never make it.
CPOMS is a great case study of success. It was the first innovator of SaaS safeguarding software, and its early sales efforts created the market. Once it grew a strong presence in a few regional areas, word quickly began to spread. It became clear that every school should move safeguarding off pen and paper, and CPOMS had the best product with market-leading net promoter scores. It grew from 5,000 schools to 14,000 schools in just a few years. It is now repeating that success with a new product, Staff Safe, which allows schools to upload, keep, record, and govern all information regarding adults working within a school setting.
The challenge for investors is to uncover the next CPOMS.
Winners and losers as competition intensifies
Prior to COVID-19, there was already steady growth in edtech adoption across both educational and business settings, but this was rapidly accelerated by the pandemic. As we slowly return to normality, the edtech market has demonstrated significant post-pandemic resilience. However, whilst COVID-19 created a period of many winners in edtech, that can’t last forever. As competition continues to intensify, investors will pick out businesses that are playing into key themes in the next phase of market maturation.
Rory Nath is an Investment Director at ECI Partners, a leading growth-focused mid-market private equity firm.
Read more: Brand new Philips E-Line interactive education displays unveiled
Advertisement / Google
DCMS survey highlights huge cybersecurity challenge for education sector
A government cybersecurity survey has identified the education sector as one of the most statistically…
Changing the way we talk to children about technology
The phrase “every day is a school day” has perhaps never been truer than over…
YuJa and Epiphan Video partner to help schools master video
How coding helps children become creative problem solvers
Electronic attendance registers to become mandatory
Rise in remote learning prompts launch of Digital Wellbeing Award