edtech
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Can learning pods scale, or are they widening edtech’s digital divide?
Lucia, a six-year old, hides from Zoom calls and has rejected every edtech tool from Seesaw to Khan Academy. She will spend all of first grade in quarantine.
Her mother, Claire Díaz-Ortiz, says her daughter fits squarely into the “distance learning death zone.” The idea is that younger children are too young to do distance learning solo, even with tools meant to make it easier. Here’s one kindergartner’s remote fall class schedule:
Just got this schedule for my kindergartner’s “distance learning” in the fall and would just like to say LOL FOREVER TIMES A THOUSAND pic.twitter.com/CXXzdbwUWa
— Aubrey Hirsch (@aubreyhirsch) July 31, 2020
“And unfortunately for my daughter, I’m a VC, not a Zoom mom,” Díaz-Ortiz said.
The impact of the distance learning death zone, as Díaz-Ortiz calls it, is one of the reasons why many wealthy families with young children are considering a new solution: learning pods.
Learning pods are small clusters of children within the same age range who are paired with a private instructor. Depending on a parent’s preferences, learning pods could be an in-home or virtual experience and be either a full-time school replacement or supplemental learning.
In recent weeks, the concept has taken off all across the country, from suburbs to cities. There’s a Facebook group for Boulder, Colorado school districts; organizers launched Pandemic Pod San Diego to “connect families looking for in-home, teacher-led learning groups.” Some households are offering teachers a retainer. Among working mom groupchats, pods are taking off as a sanity lifesaver, especially as childcare responsibilities fall disproportionately on women.
Looking for the best 4-6th grade teacher in Bay Area who wants a 1-year contract, that will beat whatever they are getting paid, to teach 2-7 students in my back yard#microschool
If you know this teacher, refer them & we hire them, I will give you a $2k UberEats gift card
— jason@calacanis.com (@Jason) August 2, 2020
Startups are pivoting to keep up with the demand for private teachers. But because of high costs, only affluent families are able to form or join learning pods, which may limit the model’s ability to reach scale while extending the existing digital divide.
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Edtech startups flirt with unicorn-style growth
When Quizlet became a unicorn earlier this year, CEO Matthew Glotzbach said he’d prefer to distance the company from the common nomenclature for a startup valued at or above $1 billion.
“The way Quizlet has gotten to this point is by building and growing a very responsible business,” he said. “It’s the result of the hard work of the team for a decade. We’re much more like a camel.”
It’s clear, though, that the tides might be changing. In edtech, the rich are getting richer. Last week, Mountain View-based Coursera announced it had raised a $130 million Series F round a day after The Information broke a story about Udemy reportedly raising new financing at a $3 billion valuation.
For anyone who has been following my edtech coverage in recent few months, this momentum is hardly surprising. Earlier in the pandemic, MasterClass raised $100 million, Quizlet became a unicorn and Byju’s became India’s second-most-valuable startup.
While edtech’s boom is predictable, the industry is known — to the chagrin of founders and to the benefit of long-time investors — for being conservative. Today we’ll look to understand how a boost in late-stage funding may impact the market on a broader scale.
High-flying camels
Ian Chiu, an investor at Owl Ventures, tells TechCrunch that the rise of big rounds brings a “watershed moment” to the $6 trillion education market. Owl Ventures was founded in 2014 and is one of the biggest edtech-focused firms out there, but Chiu says the recent strong capital flow shows that the sector is finally emerging as a sector other investors are noticing.
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8 edtech investors talk re-skilling, digital universities, ISAs and other post-pandemic trends
We know that the coronavirus has brought unprecedented attention to the edtech market, but now what? What happens when schools are no longer clambering toward an overnight solution? When the surges slow? When our world reopens and there doesn’t need to be a full-suite of at-home solutions for kids and parents?
As the next wave of edtech companies are being built to address these novel use cases, investors are looking for solutions that aren’t simply pandemic-era important. To some, that means skipping the latest videoconferencing platform play and maybe cutting a check to a digital-only university. To others, it means looking for the platform that will educate a diverse range of users, especially the unemployed.
A spree of recent consolidation within the market shows that there is a need for a better plumbing system in the fragmented world of edtech.
We turned to eight investors in the space to understand which subcategories are shaping up to be the future, following up on our first survey last fall when the world was very different, and another in early April when less was understood about the pandemic. Our goal here was to find nonobvious ways innovation is living within the noisier-than-ever sector. The result? Intel on nascent trends, deal-makers and what adaption looks like amid a time of uncertainty.
Today you’ll get a deep dive on the nerdy stuff from the following investors:
- Reach Capital’s Jennifer Carolan, Shauntel Garvey and Chian Gong
- Ian Chiu, Owl Ventures
- Jan Lynn-Matern, Emerge Education
- David Eichler, TCV
- Rebecca Kaden, Union Square Ventures
- Jomayra Herrera, Cowboy Ventures
Investors differed on which subcategories benefitted the most, but it’s clear that the pandemic didn’t lift up the entirety of the edtech space. One investor noted that the pandemic made them even less interested in ISAs, while other venture capitalists noted how valuable the financing instrument is now, more than ever before.
We got into some of the big themes that have risen in the past few months: online learning, re-skilling, ISAs, virtual universities and where each investor draws their line around these categories.
A common theme throughout the commentary now is that the opportunity presented by coronavirus is not being met with complacency, but instead a push to grow better. Investors talked about innovation needs to account for childcare, cost, digital infrastructure, and the addressable population, pandemic or not.
I think that’s enough teasing. Now, onto the answers.
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Who really benefits from reskilling?
Nearly 40 million Americans are unemployed, and a recent study that examined more than 66,000 tech job layoffs found that sales and customer success roles are most vulnerable amid COVID-19. In response, some quarters of Silicon Valley are abuzz about a long-standing technology: reskilling, or training individuals to adopt an entirely new skillset or career for employment.
As millions look for a way to reenter the workforce, the question arises: Who really benefits from reskilling technology?
That depends on how you look at it, said Jomayra Herrera, a senior associate at Cowboy Ventures. Reskilling for a well-networked manager looks a lot different than it does for someone who doesn’t have as much leverage, and the vast majority of people fall into the latter. Not everyone has a friend at Google or Twitter to help them skip the online application and get right to the decision-makers.
Beyond the accessibility offered by live online classes, she pointed to the difference between assets and opportunities.
“You can give someone access to something, but it’s not true access unless they have the tools and structure to really engage with it,” Herrera said. In other words, how useful is content around reskilling if the company doesn’t support job placement post-training.
Herrera said companies must give individuals opportunities to test skills with real work and navigate the career path. Her mother, who did not go to college and speaks English as a second language, is looking to pursue training online. Before she can proceed, however, she has to surmount hurdles like language support, resume creation, job search and other challenges.
All of a sudden, content feels like a commodity, regardless of if it has active and social learning components. It’s part of the reason that MOOCs (massive open online courses) feel so stale.
Udacity, for example, was almost out of cash in 2018 and laid off more than half of its team in the past two years, according to The New York Times. Now, like other edtech companies, it is facing surges in usage.
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Kahoot raises $28M for its user-generated educational gaming platform, now valued at $1.4B
As schools stay closed and summer camp seems more like a germscape than an escape, students are staying at home for the foreseeable future and have shifted learning to their living rooms. Now, Norwegian educational gaming company Kahoot — the popular platform with 1.3 billion active users and over 100 million games (most created by users themselves) — has raised a new round of funding of $28 million to keep up with demand.
The Oslo-based startup, which started to list some of its shares on Oslo’s Merkur Market in October 2019, raised the $28 million in a private placement, and said it also raised a further $62 million in secondary shares. The new equity investment included participation from Northzone, an existing backer of the startup, and CEO Eilert Hanoa. While it’s not a traditional privately held startup in the traditional sense, at the market close today, the company’s valuation was $1.39 billion (or 13.389 billion Norwegian krone).
Existing investors in the company include Disney and Microsoft, and the company has raised $110 million to date.
Kahoot launched in 2013 and got its start and picked up most of its traction in the world of education through its use in schools, where teachers have leaned on it as a way to provide more engaging content to students to complement more traditional (and often drier) curriculum-based lessons. Alongside that, the company has developed a lucrative line of online training for enterprise users as well.
The global health pandemic has changed all of that for Kahoot, as it has for many other companies that built models based on classroom use. In the last few months, the company has boosted its content for home learning, finding an audience of users who are parents and employers looking for ways to keep students and employees more engaged.
The company says that in the last 12 months it had active users in 200 countries, with more than 50% of K-12 students using Kahoot in a school year in that footprint. On top of that, it is also used in some 87% of “top 500” universities around the world, and that 97% of Fortune 500 companies are also using it, although it doesn’t discuss what kind of penetration it has in that segment.
It seems that the coronavirus outbreak has not impacted business as much as it has in some sectors. According to the midyear report it released earlier this week, Q2 revenue is expected to be $9 million, 290% growth compared to last year and 40% growth compared to the previous quarter, and for the full year 2020, it expects revenue between $32 million and $38 million, with a full IPO expected for 2021.
As it has been doing even prior to the coronavirus outbreak, Kahoot has also continued to invest in inorganic growth to fuel its expansion. In May, it acquired math app maker DragonBox for $18 million in cash and shares. The company also runs an accelerator, Kahoot Ignite, to spur more development on its platform.
However, Hanoa said that Kahoot is shifting its focus to now also work with more mature edtech businesses.
“When we started out, we were primarily receiving requests on early stage products,” he said. “Now we have the opportunity to consider mature services for either integration or corporation. It’s a different focus.”
Update: A previous version of this story said that DragonBox was acquired in March. It was acquired in May. The story has been updated to reflect this change.
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Zigazoo launches to be a ‘TikTok’ for kids, surpasses 100,000 uploads and downloads
Like many parents, Zigazoo founder Zak Ringelstein worries about his children’s screen time. His worries only grew when COVID-19 led to school shutdowns and kids came home to a world of remote learning. Now, as lockdowns extend, Ringelstein is learning to embrace screen time as a way to sneak education and entertainment into his kids’ digital diet.
Ringelstein, the former founder of UClass (acquired in 2015), launched Zigazoo, which he describes as a “TikTok for kids.”
Zigazoo is a free app where kids can answer short video-based exercises that they can answer through video and share responses with friends. Exercises range from how to create a baking soda volcano to making fractions out of food, and targets kids from preschool to middle school.
To ensure the app’s privacy, Ringelstein says that parents should be the primary users of the app. Users have to accept a friend request in order for their content to be seen, a move Ringelstein sees as key to avoiding bad actors or potential bullying.
Additionally, Zigazoo uses an API through SightEngine to moderate content.
Ringelstein’s first users were his own kids, a test he says was very rewarding.
Ringelstein’s son participating in a Zigazoo prompt.
The testing process made him realize that kids like to create longer videos, and watch smaller videos, so Zigazoo is figuring out an attention span for viewing. Currently, average time on site per user has gone up to 19 minutes and 43 seconds per day.
Ringelstein pointed to “Sesame Street” as his inspiration. Mixing education and entertainment has proven successful for a number of businesses. Kids were drooling in front of the screen watching the characters of “Sesame Street,” spending mindless hours staring at the television set, he recalls.
“The creators of Sesame Street…used the medium to educate kids and entertain them at the same time,” Ringelstein said. Vox described “Sesame Street” as a “bedrock for educational television,” bringing loved characters to the table with former First Lady Michelle Obama or using a silly song to teach kids about recycling.
In one month, Zigazoo has had 100,000 videos uploaded to and downloaded from its site.
While Zigazoo claims to be a “TikTok” for kids, it is competing with the platform itself. Some teachers have turned to TikTok to create lessons on solar cell systems and experiments.
Others are putting together guides of “kid friendly” TikTok creators. And TikTok itself recently let parents set restrictions on content, DMs and screen time for their kids.
Video-based learning is a better way for students to engage actively in an educational activity, versus passively reading a paragraph from a Google doc, according to Ringelstein.
Combining education with entertainment comes with a set of risks around child safety. Last March, The New York Times wrote a story about how “kidfluencers” has grown as a concept, where parents put their kids online, touting brands, and make money off of it. The resulting ethical concerns are why Ringelstein is confident that Zigazoo is needed.
“Zigazoo is a not a kid play date smack dab in the middle of an adult party like YouTube and TikTok, it is a universe tailor-made for kid safety, learning and enjoyment,” he said.
Ringelstein sees Zigazoo’s “friend” versus “follow” feature as key to the safety of kids: Unlike TikTok, where there is a public feed and users can follow everyone, Zigazoo requires users to opt-in to being followed, similar to Facebook.
The partnerships will allow Zigazoo to post verified content using favorite and well-known characters to teach kids about the subjects they care about. And in a world where digital detoxes are no longer a reality, a smarter screen-time activity seems much needed.
Recently, Zigazoo partnered with The American Federation of Teachers for a capstone project directed at millions of K-12 students. Students are invited to submit a video using Zigazoo to encapsulate their learning experience over the past school year, which AFT says is a “far better way to sum up learning than a high-stakes test.”
This summer Ringelstein is launching “Zigazoo Channels” with a select group of major children’s entertainment companies, podcasts, museums, libraries, zoos, social media influencers and more.
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3 bearish takes on the current edtech boom
Edtech is booming, but a short while ago, many companies in the category were struggling to break through as mainstream offerings. Now, it seems like everyone is clamoring to get into the next seed-stage startup that has the phrase “remote learning” on its About page.
And so begins the normal cycle that occurs when a sector gets overheated — boom, bust and a reckoning. While we’re still in the early days of edtech’s revitalization, it isn’t a gold mine all around the world. Today, in the spirit of balance and history, I’ll present three bearish takes I’ve heard on edtech’s future.
Quizlet’s CEO Matthew Glotzbach says that when students go back to school, the technology that “sticks” during this time of massive experimentation might not be bountiful.
“I think the dividing line there will be there are companies that have been around, that are a little more entrenched, and have good financial runway and can probably survive this cycle,” he said. “They have credibility and will probably get picked [by schools].” The newer companies, he said, might get stuck with adoption because they are at a high degree of risk, and might be giving out free licenses beyond their financial runway right now.
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EdSights raises money to help schools reduce their drop-out rates
While the idea of baring your soul to a chatbot might seem uncomfortable, sisters Claudia and Carolina Recchi think that might be exactly what college students across the United States need right now.
The duo co-founded EdSights in 2017 to support high and medium-risk students to stay in school, and increase university retention rates.
EdSights uses a chatbot, branded under a school’s mascot, to send personalized questions and messages to students to understand their biggest stresses. It then connects them to university resources spanning areas like financial aid, food security and mental health.
As the pandemic has forced millions of students to move off campus and learn from home, the co-founders have found a spurt of growth from colleges looking for new ways to hold onto their students.
And the pandemic has added a new layer of honesty to the answers.
“There is just so much going on with the world, people losing jobs and barely being able to make ends meet. School hardly seems pressing at the moment,” one student wrote. “And yet, grades are still there, determining our future when we aren’t even sure what the future looks like.”
Another wrote, “My work is closed. I have no income.” One said, “Because I am not going out I can’t distract myself from all the things going on in my life.”
Beyond its chatbot, EdSights has a dashboard for administrators to see what percentage of their students are struggling with specific issues at the moment. The company deals with information on high-risk students and their biggest worries, so privacy is key to their platform. EdSights says it complies with both FERPA and GDPR regulation, and does not rent or sell data to third parties. Students also have the right to request an amendment of their records and receive a full log of it.
“Obviously, universities are also spooked that students won’t show up in the fall,” she said. “So they want to make sure that there’s a connectivity and they feel connected to the university, even if they can’t go to campus.”
The company took one year to scale to 16 customers, including Baker University, Missouri Western State, Bethel University, Culver Stockton College and Westminster College. On average its ARR has been growing by 66% month over month, and it has doubled its revenue since February.
EdSights charges colleges $15 to $25 per student. Most customers bring on their entire student body.
“Before this, we did see a lot of universities asking, ‘can I roll this out to freshmen or can I only roll it out to my first-generation students or maybe those that need additional support?’ ” said Carolina Recchi. “Now, colleges are not only asking us to help with all four years, but we’ve had some institutions ask us to roll it out to graduate students, which was new, because we had never done that before.”
This newfound momentum led the co-founders to raise $1.6 million in venture capital funding from a slew of high-profile investors. Investors from this round include Lakehouse VC, Kairos VC and The Fund.
The new raise also includes investments from Warby Parker, Harry’s, Allbirds, Bonobos and Rent the Runway founders.
The EdSights co-founders say COVID-19 played a part in their company receiving inbound interest from generalist investors, who have been historically skeptical about the space, versus solely getting term-sheets from specialist education firms. In fact, the duo had to turn down a number of investors, a stark difference between the chilling effect other founders claim has covered the entire fundraising scene.
EdSights new funding is another data point of how the pandemic is forcing the general public to be more nuanced in how it thinks about the intersection of education and technology.
In the time of a pandemic, a chatbot could be the only way to remotely support millions of students. Now, it’s just up to EdSights to prove that their technology is necessary in a world where schools start to reopen, whenever that is.
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4 edtech CEOs peer into the industry’s future
When Zach Sims first started pitching his coding startup, Codecademy, he framed it to investors as a corporate tutoring company. That was intentional, despite the fact that edtech is a $5 trillion business.
“It was much easier for investors to understand instead of an education company,” he said, noting that the industry has long been defined by tight budgets and slow sales cycles.
But, as millions adopt remote learning overnight, edtech’s reputation is changing — and investors are scrambling accordingly. The revitalization means that a new wave of edtech startups is upon us. We asked four entrepreneurs who have been working in this space to share what they think the next billion-dollar business will look like. While we’ve covered the investor side of edtech quite a bit, it was refreshing to hear from founders and executives who are on the ground making decisions:
- Matthew Glotzbach, CEO, Quizlet
- Jessie Woolley-Wilson, CEO and president, DreamBox Learning
- Darren Shimkus, general manager, Udemy for Business
- Zach Sims, co-founder and CEO, Codecademy
How to sell: Classroom and outside the box
According to Matthew Glotzbach, CEO of Quizlet, “any edtech solution tailored toward schools and classrooms may find a significant headwind,” such as games or VR/AR headsets that need to be used within classroom settings. “Not because physical spaces are going away, but in this limited time, limited budget environment, teachers and administrators are going to spend their money on solutions that are more tailored toward distance.”
Startups should plan to be useful in both a pre-coronavirus and post-coronavirus world, likely hybridizing tech solutions that are useful for day-to-day classroom operations as well as remote learning.
How to reach scale: B2C or B2B?
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As lockdowns stretch on, is edtech passing or failing?
Back in January, Georgia Tech professor David Joyner got a cryptic email from a student based in Wuhan, China.
“I’m under quarantine, but my internet access is okay so I have more time to spend on classwork, I wanted to let you know,” the message read. Unsure why Wuhan would be under quarantine, Joyner did a quick Google search and saw the beginnings of the coronavirus pandemic.
“I thought, there’s something going on in Wuhan so maybe we’ll have some students affected by it,” Joyner said. Fast-forward two months and the coronavirus is a household term. All of Joyner’s students, regardless of geography, have been impacted by the pandemic.
It has been a little over a month since colleges and schools across the country started shutting down due to COVID-19. Edtech startups had a surge in usage and a demand for more resources than ever. Now that the adoption scramble has slowed, the same startups are reckoning with unprecedented use cases.
Everyone knows how they’re expected to behave in a physical classroom, but can you stop a student from cheating when taking a test in their bedroom at home? How should teachers offer 1:1 time and take questions during a lesson?
Piazza founder Pooja Sankar says teachers face more open questions: “What does it mean to record myself? What does it mean to have a camera on my face? How do I know I can hold a class with reliable internet connection?”
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