Top 4 EdTech Trends I’m Watching as a Seed Stage Investor

Some quick background: EdTech is a space that is impact-driven, tangible, and seeing a massive uptick in adoption across the value chain due to COVID-19. Some say that consumer adoption has been brought forward by a magnitude of 5–10 years, lowering customer acquisition costs and driving a great deal of staying power and habit formation in the minds of consumers. And for a space that had ~3% digital penetration pre-COVID, investors are taking notice and figuring out which areas of EdTech and companies are truly here to stay for the long haul.

As an investor at Lerer Hippeau focused on seed stage investments, there’s never been a better time to be talking about the future of education due to this velocity of change. Before I joined Lerer Hippeau, I was an Analyst at General Atlantic (global growth equity firm, investors in EdTech co’s like BYJU’s, Quizlet, Duolingo, etc.) and spent a great deal of time on thematic research and deep dives on education. For me and my colleagues, there was no better place to gather research and support our theses than attending sessions at the annual ASU GSV Summit. This hasn’t changed since joining the team at Lerer Hippeau, as evidenced below. I registered for 27 sessions this year, and luckily they were all recorded so I could go back and watch the ones that overlapped.

It’s the most wonderful time of the year. And by this, I don’t mean the holidays… I mean ASU GSV!

Before attending the summit this past September, I also put together a thread on some key themes I was tracking to hold myself accountable and see how my thinking would change/evolve after the summit. Here are a few that I mentioned :

• Marketplaces that enable the creator economy, allowing teachers to monetize their skill sets & materials outside of a traditional classroom setting. @Outschool, @Teachable, @TpT_Official.
• 1:1 tutoring models transitioning to larger online, group formats, which ends up helping the economics for a more scalable, cost-efficient model. @VarsityTutors, Juni Learning.
• Since COVID, more stakeholders are becoming involved in a child’s learning journey — -parents especially — -and tech is helping bring them further into the fold. @ClassDojo, @RemindHQ, @OKPlay, Caribu.
• Job-specific technical training for the purpose of upskilling/continuing education, whether it’s providing the platform & courses (@ACloudGuru, @cybraryIT) or facilitating discovery/learning tracks for corporate clients w/o creating content (@GuildEducation, @InStrideLearn)
• Companies that are utilizing their massive B2C userbase to launch B2B efforts, like @Coursera is doing within higher education and @Codecademy is doing with corporations for coding skills.
• Especially recently, technology that enables homeschooling (@withprimer), learning pods/micro-schools or more community-style learning (@Wonderschools), or offers transferable credits aligned with curriculum at lower costs (@outlier_org).
• Experience-based learning, especially for college students & typically through internships, to provide an edge on the recruiting process and a direct line of sight to top companies. (@Riipen, @Hello_Upkey)

It’s now been a few months since attending the ASU GSV Summit, and here I am holding myself accountable! I’m going to focus on some of the learnings from my favorite session this year, COVID Has Changed K-12 Forever — Meet the New Leaders, featuring the following panelists:

• Garrett Smiley, Co-founder, Sora Schools (A live, accredited, virtual high school)
• Kelly Smith, Founder, Prenda (In-home micro-schools)
• Ryan Delk, CEO, Primer (all-in-one homeschooling alternative for students aged 7–14)
• Vlad Stan, Founder & CEO, Galileo (self-directed online school for students aged 8–18)
• Amir Nathoo, CEO, Outschool (live online classes and clubs for kids aged 3–18)

Below I’ll discuss the key takeaways from my point of view, and also how each of these shifts my investment framework for evaluating companies at the seed stage — some build off the themes I listed above, and others are new!

Takeaway #1: “Power to the Parents“ a.k.a. parental involvement is at an all-time high, and brings student agency into the fold as well.

I’m a big believer that the future of education is hybrid — students will return to in-person learning (as many have this fall, at least in the U.S.) with a combined virtual approach. However, because of the past few months, many parents were forced to become more involved in their children’s education as the classroom moved abruptly into the home. There are more distractions than ever, a lack of motivation among students in a virtual environment, and lastly, students can simply walk away from their screens — teachers don’t have as much command as they did in a traditional classroom environment. That’s where parents come in, looking to:

• Keep their children engaged & connected in school (ie: ClassDojo, Google Classroom, Zoom, Seesaw)
• Keep them engaged outside of core learning hours due to sub-par virtual learning experiences (ie: Outschool)

Kelly Smith, the Founder of Prenda, noted that “Visibility + Access = Empowerment. This is the big striking shift — parents can see everything in education right before our eyes.” Parents are having many more questions and conversations, and actually asking about alternative or supplementary educational options beyond the classroom — and students are developing a sense of agency as well, knowing that there are more options that work for their learning styles.

What this means for my investment framework: Lerer Hippeau has been an investor in ClassDojo since the beginning, and we’ve seen the success first-hand of teacher-driven K-12 distribution for a free product evolving into a B2C paid product overtime. The B2C landscape today for supplementary education in early childhood and K-12 is becoming increasingly crowded. I’m most bullish on platforms that begin as a supplementary platform, but add enough value overtime through personalization and community that there becomes an opportunity to replace some of the traditional classroom components. A great example of this in practice is Fiveable, which began as a study tool for high schoolers taking AP exams, and is now launching their own actual AP courses.

Takeaway #2: Remote work is changing the way parents approach educating their children, as there’s more optionality for high quality education when you’re not tied to school districts.

Ryan Delk, the CEO of Primer, had mentioned during the panel that the #1 reason why people choose to live where they live is because of a job. The #2 reason is actually tied to education and school districts, which is above even family proximity in terms of priority.

Now that many companies are embracing remote work permanently, you’re seeing many families leaving expensive hubs like the Bay Area and NYC for more cost effective cities like Austin or Miami (hi, Francis Suarez!). With remote work, that #1 motivator around location effectively disappears, and the same can be said for the #2 reason around school districts. With the rise of alternative methods of education like the companies featured on the panel, there’s now optionality for parents to choose high quality education regardless of where they live.

What this means for my investment framework: For me, it’s confirmation that the future of work and the future of education are becoming increasingly intertwined. Macroeconomic factors will continue to have an impact on the future of education, and there continues to be opportunity around solutions that provide optionality and flexibility to parents and students alike.

Takeaway #3: The importance of community and peer-to-peer learning cannot be understated, especially with remote and distanced learning.

One aspect of school that’s difficult to replicate in a digital environment is the sense of community and camaraderie, which is absent from traditional conferencing platforms like Zoom and Google Classroom (a.k.a. the modern staples for many K-12 students and teachers across the country). IMHO, this is partially responsible for the lack of engagement people are experiencing in virtual classrooms everywhere. It’s harder to keep in touch with friends and learn together.

The panelists brought up two important points in my mind:

• Amir Nathoo, the CEO of Outschool, noted that “Historically when thinking of alternative education (ie: homeschooling), people have thought there’s this tradeoff of putting kids at a disadvantage because they’re not able to build relationships with kids their age in school. With advances in tech and their services, they’re eliminating that tradeoff while enhancing social relationships that are not restricted to your local group.”
• Garrett Smiley, the co-founder of Sora Schools, noted that “You have to think about what is the role of a school specifically in this decade and century going forward. It’s not content creation — instead, what schools should do is focus on the community building and discussions/labs — that’s what a school should be focusing on.”

What this means for my investment framework: Next-gen providers that are reimagining the educational experience MUST have a focus on community-building and engagement. And when I say engagement, I don’t just mean between students and teachers. I mean peer to peer, parent to teacher — basically any and all stakeholders, but always keeping the needs and priorities of the student front-and-center. I think that’s why cohort-based learning has gained so much steam and interest over the past few months. People are seeing the value in learning with a peer set and having those shared experiences. On Deck is a great example of this in practice, and I’ve been keeping an eye out for news on Wes & Gagan’s new stealth startup focused on cohort-based course infrastructure.

And this holds true for enterprise/education infrastructure companies as well — cracking the code on engagement and collaborative learning through technology will be an important area to watch. ClassEDU is one to watch here, solving for the gaps not currently being addressed by Zoom for higher ed with more education-specific use cases (ie: group presentations, one-on-one discussions, watching videos, etc.). The key is having technology that not only works for the students, but also solves pain points for professors/admins as well (ie: assessments, attendance, etc.). We’re going to continue to see the unbundling of Zoom across verticals (and building on top of Zoom — in the case of ClassEDU), and there is a large market opportunity in EdTech for enterprise providers.

Takeaway #4: On the topic of accessibility and true mass market appeal, partnerships with corporations and the government offer a path forward for private EdTech companies.

One of the questions from the audience during the panel asked about how next-gen EdTech startups with paid offerings can ensure that low-income families aren’t being left behind. Accessibility to high quality education at affordable price points will continue to be an issue that many need to address in the coming years, and some startups have already started taking action. For example:

• Primer is able to offer scholarships because their marginal costs are much lower than operating a traditional school.
• Sora Schools offers sliding scale tuition, offering reduced tuition for some and a more expensive price for those that can afford it.
• Others like Outschool and Prenda are attempting to form partnerships with both corporations (ie: offering education as a benefit for their employee’s children) and existing school systems / governments in order to create that access and affordability.

What this means for my investment framework: I meet with many early consumer tech and D2C companies, and one thing I’ve been emphasizing lately is the idea that every B2C company needs to have some type of B2B or partnership strategy [see an interesting case study I tweeted about here, when Cameo (B2C) partnered with Sendoso (B2B)]. It doesn’t have to be on day one, but it’s something to think about and include in your roadmap — this mindset and approach is something that’s resonated very well with founders thus far. It’s an effective way to combat rising customer acquisition costs via traditional avenues like Facebook and Instagram marketing, and similarly, get your product into the hands of more consumers and increase mindshare. The same is true for EdTech, where the idea of forming strong, impactful partnerships has an even more important mission — it not only helps with increasing brand awareness and distribution, but also in making the product more accessible in cases when a corporation or the government can provide sponsorships to low-income families.

EdTech will continue to be an area of focus for me heading into 2021 and beyond. I love that it’s mission-driven, and so closely impacts the people in my life (of my 5 immediate family members, 3 are students — my 2 younger sisters are undergrads, and my mom is getting her eMBA at Cornell!).

For founders building in EdTech, I’d love to meet you. Shoot me a note at meagan@lererhippeau.com. You can also reach me on Twitter (https://twitter.com/meaganloyst) where my DMs are open & I tweet frequently about thematic trends.

If you want to see more EdTech pieces from me, check out my Building with Purpose Interview Series with EdTech CEOs like John Katzman (Founder of 2U, The Princeton Review, and Noodle Partners), Taylor Nieman (Co-founder of Toucan), Ankur Nagpgal (Founder of Teachable) and more. I also have a new piece I’ll be publishing in the new year, addressing EdTech from the student POV, similar to my Gen Z VCs article that went viral a few months ago.

And to the ASU GSV team, thank you for always putting out such great content — and for this year, making it free to everyone. I’ve sent the recordings to many students interested in developing theses on the space, and it provides a fantastic / low-friction way to access some of the greatest minds in EdTech. Can’t wait for the next conference, hopefully you’ll see me in San Diego in 2021 ;)