Remote learning drives wave of ‘EdTech’ investments

Like so many other things we’ve previously taken for granted, COVID-19 has changed the way we learn. In many situations, face-to-face teaching has become something to be avoided and innovation is responding to this trend in a major way. Several industries are keen to meet demand for effective, tailored and accessible education technology (EdTech) and the result has been an active M&A market around the world.

The UK, and particularly London, is taking a leading role in the industry, which is only just starting to hit its stride, boosted by school, university and workplace closures globally. And investors are taking notice - with venture capitalists eager to snap up start-ups or invest heavily in prospects that they believe will grow.

What’s been happening in the UK EdTech sector?

Although COVID has certainly given it a boost, the EdTech sector has actually been extremely active in the UK for a number of years. Schools already spend some £900 million of their precious budgets each year on EdTech, while the market globally is set to reach a total value of around £120 billion in 2020.

In London, last year (before COVID even struck), London EdTech firms raised some £94 million in venture capital funding. Laura Citron, CEO at London & Partners, explained that London’s “thriving EdTech ecosystem provides access to growth capital, expertise, talent and universities all in one place. It is a city that fosters creativity and innovation, enabling startups and scaleups in the EdTech space to develop exciting new technologies that will shape the future of learning.”

Most of the activity and innovation in the sector, however, hasn’t come from more traditional education publishers, but from start-ups. That is, until the global pandemic arrived and EdTech became a must-have for education providers, as opposed to a ‘nice-to-have’.

The education sector has long-been considered to be extremely conservative when it comes to innovation and investment. It’s a slow-moving, traditional industry in the UK where things have been done a certain way for a long time. Purse strings can be tight and spending decisions are often wrapped up in red tape and inflexibility. However, along came COVID and everything changed.

What’s driving UK EdTech M&A?

There are several places from which many of the deals in UK EdTech are coming:

Private equity investment

Investors have increased their interest in the EdTech sector since COVID, as they identify attractive characteristics in the market, such as scalability and loyal customers. In light of the pandemic, user numbers have soared for many EdTech businesses and some have offered free access in order to reach as many users as possible.

However, as time goes on and classrooms remain closed, users demand more tailored education provisions. In turn, investors are learning that this is the time to offer an enhanced product in exchange for subscriptions or paid-for apps and access models. Investment allows start-ups to develop their initial products into something more appropriate for long-term use, which individuals, businesses and educational institutions will happily pay for at scale.



Educational publishers

Increasingly, publishers are realising the value of investing in EdTech in order to ensure their products are suitable for increased remote learning in the future. The EdTech industry has disrupted the traditional education publishing industry to the extent that publishers are now buying up EdTechs in order to modernise their offering.



Strategic investment/consolidation

EdTech start-ups looking to expand their customer base may find doing so difficult due to the conservative nature of the marketplace in which they operate. Buying up a rival in order to take over their operation and customer base is an attractive prospect for small EdTech businesses with an appetite for growth and money to spend.



In conclusion, the EdTech sector is likely to be one of the few sectors to significantly benefit from the pandemic. Having said that, the issues that are driving greater take-up and demand for digital learning, educational AI-driven tools and money-saving tech for the education sector are long-established and are not going away. As a result, investors around the UK and beyond are confident that the need for EdTech will certainly outlive COVID-19.

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